Noriel Roubini, also known as "Dr. Doom" makes his case for temporarily nationalizing the banks or risk a decade or more of banking problems. What is also worth noting are the costs to date involved in saving the banking industry. CNBC and Rick Santelli are ready to revolt over $50 billion for homeowners yet the costing to support Wall Street makes that amount look like a rounding error. There's a legitimate argument to be made against supporting irresponsible homeowners but to call out the Minutemen after throwing out trillions is silly and nothing more than a PR stunt for a failing network.
From Roubini:
"The market friendly solution is temporary nationalization," Roubini told "Worldwide Exchange".So is $7 trillion to $9 trillion more or less than $50 billion? CNBC needs to help us understand how there is so much outrage for homeowners but not for banks. They look more pathetic by the day.
"Doing something surgical and radical actually may improve the market sentiment," he said. "If we don't do it, we risk ending up like Japan, that had zombie banks for a decade," he added.
Furious banking consolidation that took place in the years preceding the crisis has made matters worse, as it had created banks that were too big to fail but also too big to save, according to Roubini.
The US government has already provided between $7 trillion and $9 trillion in explicit or implicit support for banks, and taxpayers would actually benefit from nationalization, as they wouldn't have to bail out shareholders as well, he said.
"If you don't nationalize them on a temporary basis the fiscal commitments will be bigger," Roubini said. "The alternative is actually a dangerous debt spiral. We risk ending up in a near depression for the US and the global economy if we don't take this radical action as necessary."
