I’m with you, Jonah. Aside from the peripheral details (I don’t quite see why American taxpayers should now be the principal sponsors of Manchester United soccer team) there’s something very unsettling about the symbolism. Old-school socialist nationalization generally involved governments owning industries that actually produced something – a coal mine or an automobile. But there’s something almost too creepily apt about the United States government now being, literally, one of the planet’s biggest insurance companies.
The old line on imprudent debt went something like: If you owe the bank a thousand dollars, you have a problem; if you owe the bank a million dollars, the bank has a problem. We seem to have casually accepted the extension of the paradigm: If the bank loans you a million dollars, the bank has a problem. If the bank loans you a billion dollars, the US government has a problem. But why? Short-term “turmoil” (ie, change and opportunity) in the markets would seem preferable to Washington buying a junk portfolio for every federal taxpayer.