"... Geithner indicated he was opposed to nationalizing banks ..."

[Cronopio]

http://www.marketwatch.com/news/story/geithner-says-bailout-plan-soon/story.aspx?guid=%7B69FBDA60-5510-480D-8CA4-8C867FF5580E%7D

I agree with him. There is a third option that is more direct and much cheaper.

Don't help the banks and don't liquidate them. Leave them all alone to deal with the inevitable results of what they've created. If they go under - so be it. Hail the free market.

An essential element: So the rest of us don't have to pay for their fiscal sins, the government should create a nationalized bank that manages its own loans and directly competes with the private sector.

Same with health care. The government creates a nationalized health care system that operates according to what it has determined as a fair profit margin and operating cost. Same with energy - a nationalized oil company that buys oil and renewable energy directly from the producers. If necessary, this oil company buys land and drills its own wells.

These three sectors - energy, health care, and finance - are the foundation of the economy so they would be only sectors affected in this way. Nationalized computer or cosmetic companies, no need.

The advantage of this approach is that the taxpayer doesn't prop up a failing private sector. It simply uses market forces and competition to indirectly manage the private sector - to set the boundaries of the game so to speak. It is entirely up to the companies themselves to figure out ways to compete effectively with the nationalized companies. In the process, they get to defend the free market ideology. If they can't, adios muchachos.

The other advantage is that the nationalized companies can operate at lower profit levels to "put the squeeze" on entire business sectors if necessary. If energy costs need to go down across the board, the nationalized companies can even run at a loss. They can restrict their output so as not to put all of the private competition out of business, but eliminate the most inefficient companies.

Of course, another advantage is that the nationalized companies would be a jobs safety net. When private companies have to lay off workers to improve their margins, the nationalized companies get to add to their work force.

It's obviously unlikely to happen for the obvious reasons, but the beauty of it is that its libertarian detractors can't oppose it without implicitly admitting that private companies cannot function as efficiently as socialized companies. If they try to bring up the argument that private companies can outcompete the nationalized companies, simply the threat of enacting this plan (if Obama was courageous enough to do it) would be the definitive way to call their bluff and say "Prove it."

[provis99]

1. good idea; its been tried out in other countries

In Canada, they call government corporations Crown Corporations; they compete in goods and services with the private sector. Some were big moneymakers, like PetroCanada, and managed to keep the private corps honest and prevent collusion. Unfortunately, it was successful, so when the Conservatives got into power, they sold off PetroCanada to private oil companies at pennies on the dollar, and now gas is twice as much in Canada as it is in the US.

Government-owned corporations outcompeting the private sector is what conservatives fear the most, because it points out the lies that the private sector is more efficient, and most cost-effective. Without government corporations, capitalism is just a bunch of oligopoly conspiracies against the ordinary citizen.

[Cronopio]

5. Did not know that - thanks! Good on the Canucks for showing that the idea does work.

From what you're saying, it seems obvious to me that the existence of these corporations must be legally mandated.

"Unfortunately, it was successful, so when the Conservatives got into power ..."

*sigh* Who else would have been so stupid? And let me guess, their argument for privatization went something like "Yeah, PetroCanada is doing well but a privatized PetroCanada would be much more efficient and profitable."

"Government-owned corporations outcompeting the private sector is what conservatives fear the most ..."

I'm sure that Alberta's success in demonstrating the benefits of socialized medicine is precisely the reason that Reagan was hired to record those records about the evil Commie threat of socialized medicine.

[robinlynne]

2. I wish. I'm with you 100%.

[williesgirl]

3. Makes so much sense it probably doesn't have a chance of happening! rec'd

[GeorgeGist]

4. There is no such thing as a fair profit ...

and that's why the profit sector sucks.

[Cronopio]

6. Well, the good thing about these nationalized corporations is that they would operate at a profit.

The profits go back into the government to pay for more projects or to offset the need to hike taxes. As taxpayers, the workers at these companies are essentially the investors and stockholders.

If that isn't a fair profit, it's the closest thing to one I can think of.

[truedelphi]

7. K & R ing n/t

[Veritas_et_Aequitas]

8. It makes sense, so it will never be employed. nt

[unblock]

9. bingo! "too big to fail" bailouts is too big a benefit for no fee

if they want to keep the profits private, then the price of failure needs to be private as well.
if they want the government to bail them out, then they need to pay a fee, so there's a "too big to fail" fund for bailouts, so the taxpayer doesn't get hit.

creating government sponsored entities is a great way to help the innocent victims of private screwups.
a new mortgage lender with a clean balance sheet, a new auto lender, and so on.

why sink money into the failures when you can create your own successes?