Nationalize or Cannibalize?

Nationalization is generally not a good thing.  Capitists and libertarians hate it. 

Cannibalization is also generally not a good thing.  People with a social conscience don’t particularly like the thought of eating our own. 

However, it seems to me that in today’s world, we need to get a bit more comfortable with both words.  Nationalization seems to be what is needed for our banks.  Cannibalization is what seems to be needed for all the industrial companies that can’t make it.  The bankruptcy system is here for a reason.  It is a means for renewal of businesses that are not sustainable.  Nationalizing industrials companies will lead to socialism and survival of the neediest.  Letting industrial companies be “cannibalized,” or eaten up by various entities for their assets, is the only way that true renewal can be achieved.

Let me be clear:  if we could let our banks go bankrupt without jeopardizing the global financial system, I would favor that outcome.  Problem is that bank bankruptcies will have a catastrophic impact.  Kind of like an ice age, imagine a global ice age for credit.  Not good.

The two articles below from the New York Times are advocating weak banks being nationalized and weak industrial companies being cannabilized.

OPINION   | February 23, 2009
Op-Ed Columnist:  Banking on the Brink
By PAUL KRUGMAN
Why not just go ahead and nationalize? Remember, the longer we live with zombie banks, the harder it will be to end the economic crisis.

 

OPINION   | February 22, 2009
Op-Ed Columnist:  Start Up the Risk-Takers
By THOMAS L. FRIEDMAN
Precious public money should focus on investing in a new generation of innovative companies, not on bailing out the losers.