'Nationalise banks' says Stiglitz

'Nationalise banks' says Stiglitz

Professor Joseph Stiglitz
We don't have the control, so they get to make the decisions in their advantage

Professor Joseph Stiglitz

There's a growing chorus of voices in the United States suggesting that temporary nationalisation may be best solution for the living dead among America's banks.

The voices include Alan Greenspan, a former chairman of the Federal Reserve, and the Nobel prize-winning economist Joseph Stiglitz.

The argument goes that rather than drip-feeding public support to so-called 'zombie' banks, the government should take them over, clean up their balance sheets and sell them off.

It is not something the Obama administration wants to consider right now. After all, nationalisation is a dirty word for many free-market Americans.

Market uncertainty

But then what does it really mean - full state control, or partial ownership? After all, the US government already owns about 40% of Citigroup.

The US Treasury and the Federal Reserve dismiss the idea of nationalisation. But uncertainty about it is causing upset in the markets.

Business Daily's Lesley Curwen spoke to professor Joseph Stiglitz of Columbia University, who believes it is only a matter of time before nationalisation happens.

Listen Listen to professor Joseph Stiglitz (5 mins 50 secs)

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First broadcast on Business Daily on 2 March 2009