Fix the problem

Barry Ritholz has an excellent comment today re nationalizing the banks.

Most of the talk against nationalizing the banks (or more accurately the failing banks) worries that such a move would destroy people's confidence. Ritholz defines reality, "Let me make sure I understand this: We have lost 4 million jobs in about a year, the S&P500 had its first quarter ever where profits were zero, the government has given away trillions of dollars in ill advised corporate bailouts, credit remains frozen, the housing market is still in the crapper, and the stock market is down by more than 50%, with the Bear market losses now about $11 trillion dollars — and nationalizing the banks is whats going to undermine confidence?"

He concludes:

Classical economics made a fundamental error in its key conception of Human Beings, treating them as perfectly rational. It now compounds that error by utterly misunderstanding Confidence.

Fix whats broken, namely the financial system. When that’s repaired, confidence will improve.