Nationalize

• And so it begins. The Treasury Department will, this week, start passing out $125 billion of Halloween treats to the 9 major investment banks involved in the "rescue." Or "bailout." Or, worst case scenario, "armed robbery. Good times.
  

  Assistant Treasury Secretary David Nason said the deals with the nine banks were signed Sunday night and the government will make the stock purchases this week. The deals are designed to bolster the banks' balance sheets so they will begin more normal lending.

  The action will mark the first deployment of resources from the government's $700 billion financial rescue package passed by Congress on Oct. 3.

  The bailout package has undergone a major change in emphasis since it was passed by Congress. Treasury Secretary Henry Paulson decided to use $250 billion of the $700 billion to make direct purchases of bank stock, partially nationalizing the country's banking system, as a way to get money into the financial system more quickly.

  What does that mean for how the banking sector does business? Well, I'd expect things to be a hell of a lot more conservative than what we've seen over the last two decades, for a start. Beyond that... who can say?
  
• The auto industry wants to get in on the nationalization kick, as GM has asked the gov't for some help in acquiring Chrysler. They've gone so far as to ask the Treasure to actually take an official stake in the company, which no doubt has Uncle Milty spinning in his grave. But why do they actually need the money? What, exactly, would the taxpayers be buying into?

  The automakers have estimated that a combination would need $10 billion in new equity to shut plants, cut jobs, integrate operations and add liquidity, the Wall Street Journal reported, citing people involved in the talks or briefed on them.

  Oh good lord. We have to pay GM and Chrysler to cut jobs? Let me be the first to say that this does not look like a particularly compelling plan.
• So as the speculation economy of the past 30 years continues its downward spiral, where does this all end? In a pot of gold. Srinivasan Venkataraghavan (kick-ass name, btw) says that the inevitable inflation caused by the cratering of the current economy will lead just as inevitably to a commodities boom, as folks stop investing in "guesses" and once again begin investing in "things."
• Roger Bootle of The Telegraph has a great piece on the Keynesian reality of the current economic crisis.

  We now find ourselves in Keynesian conditions. So this is the time for Keynesian solutions. What are the implications? There is nothing anti-Keynesian about trying to get out of the current position through lower interest rates. For anyone who believes in markets and is wary about state action, this must be the first resort. But don’t be surprised if this does not work.

  In that instance, don’t be shy about allowing huge increases in government borrowing to stave off depression. Finance must not be confused with economics. Debt has to be serviced all right, and this has costs, but idle men and machines are real costs which are never recoverable and hence are borne forever.

• Also, we're now at war with Syria. And Pakistan. Happy Monday!