What the Obama administration is doing is far worse than nationalization: it is ersatz capitalism, the privatizing of gains and the socializing of losses. It is a “partnership” in which one partner robs the other. And such partnerships — with the private sector in control — have perverse incentives, worse even than the ones that got us into the mess.
So what is the appeal of a proposal like this? Perhaps it’s the kind of Rube Goldberg device that Wall Street loves — clever, complex and nontransparent, allowing huge transfers of wealth to the financial markets. It has allowed the administration to avoid going back to Congress to ask for the money needed to fix our banks, and it provided a way to avoid nationalization.
It seems that the American taxpayers will be screwed, even with Obama instead of Bush at the helm.
P.S. The New York Times website has a nice feature where you can highlight a word and a question mark will appear. If you click on the question mark, the site will show you the definition of the word. For example, you can highlight "Ersatz" and you will know that it means fake.