Leaders at global forum see money crisis as chance to expand government control
A call to utilize the current global economic crisis as a panic in which governments worldwide can move to nationalize banks is emerging from the 2009 World Economic Forum in Davos, Switzerland.
The forum’s founder, Klaus Schwab, told CNN yesterday the current global economic slowdown is a “transformational crisis” that should be utilized to shape a new world.”
“Above all else this is a crisis of confidence,” Schwab said. “To restore confidence you have to establish signposts that the world after the crisis will be different. We have to create a new world and that is what Davos 2009 will be all about – serving society.”
Speaking from the Davos conference yesterday, Nouriel Roubini, New York University professor at the Stern School of Business, told CNBC the global banking system is “effectively insolvent.”
Roubini estimated that the worldwide crisis in bad bank assets will extend far beyond the Collateralized Mortgage Obligation problem caused by subprime loans. He expects the crisis to include bad loans in consumer credit cards, car loans and student loans, as well as commercial loans that have been packaged into securities sold as assets to banks and brokerage firms.
Roubini estimated that the worldwide crisis in bad bank assets will extend far beyond the Collateralized Mortgage Obligation problem caused by subprime loans. He expects the crisis to include bad loans in consumer credit cards, car loans and student loans, as well as commercial loans that have been packaged into securities sold as assets to banks and brokerage firms.
Roubini estimated the bad asset crisis would amount to $3.6 trillion, about half of which he believes will be held by U.S. banks and brokerage firms.
Roubini called on the Obama administration to employ the “Swedish solution,” in which the U.S. government would nationalize troubled banks, not just investing bailout cash but also taking over and giving management control to U.S. government bureaucrats. Continue reading . . .
