Now, That Would Be Fun, Wouldn't It?

Chap in the FT suggesting that the way to get banks lending to each other again is to take them all over, and nationalise them.  That's effectively what Scandinavia did in the 1990s to tidy up their crisis.

Only there it was quasi-voluntary, with the Wallenberg owned Handelsbank finding other means of generating credit rather than wiping out the owner's stake. 

If we think that there is panic in the markets now, let's hope that this little idea of wiping out all banking shareholders does not get traction, or we'll really see some action.  Not to mention that the nationalisation would be a credit default event to my mind, creating an instantaneous CDS nuclear event that would not leave a single market participant standing.   Hope this guy doesn't get let out of lectures for the next day or two...

Jerry Pournelle often makes the comment, the scariest sentence in the world is:  "Hi, I'm from the Government, and I'm here to help..."