The Instigator
kimchi
Pro (for)
Losing
0 Points
The Contender
m93samman
Con (against)
Winning
8 Points

Should we nationalize the banks?

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Voting Style: Open Point System: 7 Point
Started: 1/2/2011 Category: Politics
Updated: 6 years ago Status: Voting Period
Viewed: 1,181 times Debate No: 14225
Debate Rounds (5)
Comments (3)
Votes (2)

 

kimchi

Pro

I argue that we should nationalize banks that are not adequately capitalized. The reasons for this are pretty straightforward. First, we must divide the "too-big-to-fail" banks into smaller banks and separate the more complex parts from the simpler ones, and try to get private investors to take over the more complex ones as quickly as possible, the government may even hire private managers to take over some of the banks if needed. If the "too-big-to-fail" banks are allowed to become even bigger, the potential costs in the future may surpass those incurred in the short-term, as they may be tempted to take on more risk than they would have. Secondly, bailing out the shareholders is socialism for the rich and does not do anything to help the economy. The money would be better spent if it was given to the middle class as the economy could benefit from further stimulus. Thirdly, the government will be immediately able to assess the situation in which the banks are, the banks will not be able to lie about their balance sheets and as a consequence will start lending again sooner.
m93samman

Con

I thank my opponent for instigating this debate topic.

It seems that there has not yet been any substantial argumentation, as my opponent only speculated using his own perception of economics. I'll wait until next round to offer my arguments, assuming my opponent will do the same, so that we have an equal number of rounds to argue.

Thanks again, and good luck.
Debate Round No. 1
kimchi

Pro

Obviously, I did make policy prescription, but the arguments are not merely my view of how economics works. They are based on realistic possibilities and facts. The first point is about a concept we call moral hazard that is frequently discussed in scholastic works and thus recognized of being of significant importance in economics. The second point is based on the well known fact that the middle class contributes the most in consumer spending and is the most dynamic group in this respect; while the rich spends a smaller portion of their income, thereby contributing to deflation. The third point requires no clarification whatsoever.
m93samman

Con

Thanks again, and good luck.

I'd also like to apologize in advance in the case that I forfeit, as I have long training sessions at my newly acquired second jobs that will take up a lot of my time, on top of the fact that this debate only allows for 24 hours between arguments.

== CONTENT ==
o Resolutional Analysis
o The Con Case
o Refutations of Pro
o Summary
o Sources
===========

o Resolutional Analysis

The question at hand asks us if we should nationalize the banks and place them under the control of the federal government. That being the case, we can come to several observations regarding how the debate ought be conducted.

1. The Burden of Proof

Pro has the Burden of Proof in this debate, being the instigator and furthermore advocating an alteration to the policies in the status quo. As a result, Pro must demonstrate why nationalizing banks is, on balance, a net benefit to the country nationalizing them.

2. The Context of the Resolution

The resolution does not specify a time or place in which the nationalization of the banks occurs. For the sake of argument, it is clear that we are referring to contemporary times because banks are both relatively recent and it wouldn't make sense arguing for nationalization in an era when the banks were already nationalized. Secondly, the spatial context remains unclear; even through two rounds, my opponent has not specified the US has the place. For this reason, we must consider the nationalization of banks in ALL countries, thus expanding the domain of the resolution to include ALL governmental regimes.

o The Con Case

1. Share Preference

The nationalization of banks will eliminate private shareholders benefits, and bank preferences which have naturally developed over time. Dr. Roubini writes [1], "the domino effect of killing the preferred shares and bonds will create a Lehman type ripple [2] across the globe. Just what we need now, right? Also, I am sure that the Obama Administration has broadband internet by now, and if nationalizing the banks was going to happen, I think they would have moved on that path before the Stimulus package was passed. Obviously someone looked at the bank nationalization plan, fed it through the super-computers like Constellation at UBS, and said "WOW! I guess we better not go down that route!""

2. Stock Holders

Nouriel Roubini continues [1], "At the macro level, who usually owns bank equity and bank bonds? Well, they are usually very conservative investments, provide a steady stream of income through predictable and stable dividends and their bonds are extremely safe and pay consistently. The perfect holder of a bank stock, preferred, or bond from about 1950 to 2006 would be a retired person, a pension fund, or even 401k type plans."

Simply put, wiping out all these banks would eliminate hundreds of thousands of senior citizens and make them financially dependent, assuredly harming our economy through numerous potential methods.

o Refutations of Pro

The Pro side has yet to offer substantial argumentation, and therefore I really have nothing to refute. No sources have been provided; no analysis offered; no real arguments clearly presented. The first argument is two sloppily compiled run-on sentences that claim we should do 'x' action. No reason is given. The second argument is a totally unwarranted labeling of an economic practice that my opponent has clearly done insufficient research on; the claim is that bailing out shareholders is "socialism for the rich". Knowing now who these shareholders are (see Con {2}), I refer my opponent to predictions on the social security fund of the US [3]. The system has been and is paying out more in benefits than it is receiving in taxes; nationalizing banks will only exacerbate the problem.

o Summary

As of the end of round 2, there is very little offense coming out of the Pro case. I urge a Con ballot (for now), and will dish the rock off to my opponent until my round 3. Good luck.

o Sources

[1] http://seekingalpha.com...

[2] http://seekingalpha.com...

[3] http://www.cato-at-liberty.org...
Debate Round No. 2
kimchi

Pro

There is no such thing as a burden of proof, unless it is a rule that was agreed upon by the participants beforehand. By nationalization I mean the temporary public ownership due to a lack of private capital, the context is irrelevant and I was clearly referring to banks that are deemed to be undercapitalized. You quoted Dr. Roubini saying it would create a domino-effect. This is quite plausible, but the magnitude depends largely on the policies taken by the government. The government would likely respond by requiring banks to undergo a stress test in order to identify undercapitalized banks and announce which banks it plans on nationalizing, driving the price of the stocks of the banks in question further down. The potential upside for the government would be very high. Other banks may become insufficiently capitalized on such news; however, private consortiums may be formed in order to prevent a further collapse of stock prices. Even if no one takes the initiative, the government will still be able to take significant stakes in those banks and profit from huge potential upside, especially if the fall in value was unwarranted. Furthermore, the government can decide to bail out common investors if it wanted. The debt incurred by bailing out banks is significant, which will have to be repaid, and would have been lesser if the government could have taken more stakes in the undervalued banks.
m93samman

Con

I'll give my opponent another chance to actually respond. This is getting rather frustrating; until then, please vote Con.
Debate Round No. 3
kimchi

Pro

Keep copying and pasting stuff you read on the Internet.
m93samman

Con

I'll take it as though my opponent forfeits the debate. Please vote Con.
Debate Round No. 4
kimchi

Pro

kimchi forfeited this round.
m93samman

Con

Please vote Con. Thank you.
Debate Round No. 5
3 comments have been posted on this debate. Showing 1 through 3 records.
Posted by Cody_Franklin 6 years ago
Cody_Franklin
I'll debate you on this, kimchi.
Posted by Koopin 6 years ago
Koopin
lol @ Pro.
Posted by dinokiller 6 years ago
dinokiller
fail much kimchi :P
2 votes have been placed for this debate. Showing 1 through 2 records.
Vote Placed by S98-SAMMAN 6 years ago
S98-SAMMAN
kimchim93sammanTied
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Total points awarded:07 
Vote Placed by m93samman 6 years ago
m93samman
kimchim93sammanTied
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Total points awarded:01