"... Yes, the shareholders will get wiped out in this scenariuo - but these companies have lost 95% of their value already. And for the consumer there won't be any difference. You won't see any interruptions of service, and your accounts will be protected."
- Simon Jenkins, Economics Profesor at MIT, former chief economist of the International Monetary Fund, Money interview ('Nationalize the Banks, and Quick!')Oh, please.Just because someone has lost 95% of the value of a security, that's no reason to be so cavalier about the 5% that remains. Also, the 95% value loss is the number from the stocks' high, many stockholders with holdings will have purchased at a range of lower prices (and thus have a smaller loss). Lastly, as argued before (see links below) the stockholder currently has the possibility of recovering some of the loss (or making a profit, depending on purchase point) if the stock recovers along with the economy... One would expect an economist of Mr. Jenkins' caliber and experience to know this!
Theory vs. practice - March 30th, 2009
Randon thoughts.. - February 15th, 2009
Rhetorical questions... - February 11th, 2009
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