President Obama is holding a “Fiscal Responsibility Summit” in the White House today.  The bipartisan meeting features five topic-specific breakout sessions, on Social security, Healthcare, Tax reform, Budget process, and Procurement, and  includes lawmakers, economists and a range of special interest leaders.  Here's the full list of those  in attendance.  The Summit characteristically breaks with the trajectory of vast government spending that the Administration has been on, since Obama took office.  The President in his introductory statement indicated that cutting the federal deficit in half, perhaps not coincidentally by 2013, as one of his main goals.  But it’s the inherited deficit of $1.3 trillion that was passed on by the Bush Administration to the Obama Administration that is in the President’s sights.  The markets are very, very jittery.  The Dow Jones has lost half of its value since its highest point in the fall of 2007, heading towards the 7000 mark, with NASDAQ and S&P500 following closely in the loss of value.  The concerns of the investors are about the future of the big financial companies, like Citi Group.  In particular, the shareholders are worried about the possibility to “nationalize” the banks. Right now, the government regulators, the Treasury, Federal Reserve, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency and Office of Thrift Supervision, have come out only with the plan to provide additional capital to the banks that are determined to need it after a series of unspecified “stress tests” take place, starting on February 25th. However, more and more prominent economists like Krugman and Roubini are throwing their support behind the idea of “nationalization” of some or all of the U.S. banks.  Roubini is advocating for the “Swedish approach,” i.e. “you take the banks over, you clean them up, and you sell them in rapid order to the private sector—it’s clear that it’s temporary.”  Krugman believes that what has been transpiring with the banking reform can be described as “lemon socialism”: the government infuses the banks with funds without getting anything in return, in effect, transferring the money from taxpayers to private shareholders with no strings attached.  Nationalization in, his view, would be a more honest handling of the problem banks that have so little capital that in a sense the whole value of their stocks right now is tied to whether or not Uncle Sam will continue with the cash handouts.  Believe it or not, Alan Greenspan is in favor of the nationalization, too. What a difference can a year make.