Hedge Fund Manager: All Major U.S. Financial Companies Will Be Nationalized Within a Year
November 23rd, 2008Via: CNBC:
It’s not preferable, but all major U.S. financial companies will eventually be under government control because the alternative is so much worse, Hugh Hendry, chief investment officer at hedge fund Eclectica Asset Management, said Friday.
“All financials will be owned by the U.S. government in a year,” Hendry said. “I bet you.”
Nationalizations take dramatic losses from the private sector and places them on the larger balance sheet of the public sector, he said.
“It’s not good,” but society is vulnerable and society is going to have to intervene, Hendry said.
Shareholders Should Get Nothing
Because the taxpayers are forced to foot the bill for bailout out the banks, shareholders shouldn’t be compensated, Hendry added.
“Actually the shareholders of Citigroup have looked the other way for more than a decade” while management took excessive risk, he said.
Shareholders should take nothing away if it is nationalized, because the taxpayer will be “paying this for a long, long time,” he added.
Everybody please rise for the new national anthem.
The major x factor here is, what will become of the prime brokering business? I´m imagining a perverse loop where the government-held investment banks, collateralized by deposits, resume investing in cash-settled, highly leveraged futures contracts on commodities or otherwise provide the leverage to third parties (like this clown). So they tax us to pay banks to risk our deposits in making a profit on making our food and fuel more expensive.
I give this whole new world order four years before it goes completely tits up. They might be able to buy more time with the cleantech investments, but then they´ll just increase the odds of creating a Singularity-esque phenomena they can´t control. Fun times to be growing your own food while having an internet connection.