The pressures to start a serious program of bank nationalization grow by the day. The great bubble-blower himself, Alan Greenspan, has lurched up from his free market mausoleum to admit that a government takeover is needed ("It may be necessary to temporarily nationalize some banks in order to facilitate a swift and orderly restructuring"), a view seconded by a growing number of bankers and by politicos all the way from the right to the center-right--the whole spectrum of official U.S. opinion, that is.

Even the likes of South Carolina Sen. Lindsey Graham, hardly a friend of the common folk, sees the dollars-and-cents logic of the proposition. "We've got preferred stock worth $45 billion in Bank of America," he says in a remarkable interview with the Charlotte Observer, "and the bank's worth half that amount [in market value], so how do we ever get that money back? Instead of giving Citigroup $40 billion when the entire bank is worth $13 or $14 billion, wouldn't it be better just to buy the damn thing?"

Graham is wrong by implication about the ultimate price of a takeover, because the market value of the 15-20 banks currently awaiting their "stress tests" represents only a fraction of the recapitalization it would take to make them effectively solvent again. Nouriel Roubini has placed that figure at around $1.8 trillion, and other economists seem to be falling into rough agreement. Even at that price, a regime of nationalization would be cheaper and more efficient than the crazy quilt of lending, spending and guarantees proferred since last fall, in which the total potential liabilities of the Treasury, Fed, and FDIC have swollen to the vicinity of $10 trillion. Temporary government ownership of the banks would present a lot less eventual risk to the American public, since the government would have meaningful assets to sell back to the private sector--the banks themselves, with bad debts written down--in lieu of all the toxic paper they're trying to take off banks' balance sheets in piecemeal fashion now.

Paul Krugman's column in the Times on Monday made the case for nationalization about as concisely as it can be made: The banks are already broke; we can't afford to let them collapse; and we can't afford paying to keep their shareholders intact. To this, one might add that the lesson of previous bank collapses in Sweden and Japan is that economies don't start to get better until banks are made to swallow hard and write off bad loans, wiping out the banks' shareholders in the process. But here and now in the United States, the abiding political imperative is to keep the same game and the same players going a while longer in the vain hope that a) debt-riddled banks can "grow their way out of it" and b) incremental regulatory reforms can keep them from racing down the same path again. The main political question of our time is who takes the hit for the banks' folly: the owners of the banks or the rest of us?

Since the banking system broke wide open last fall with the government's decision to let Lehman Brothers fail, the course of Bush and Obama administration policy has been charted by Goldman Sachs and Citigroup alums, who understandably prefer the latter.This raises a different question: Are the banks really broke if, for practical purposes, they still own the government? Unfortunately, the answer is yes. Hence the Obama administration shuffles toward nationalization, quivering and equivocating every step of the way while the economy burns--now saying the government may take up to a 40 percent stake in Citigroup.

As citizens, we all need to understand that the implications of the nationalization question extend far past the near-term success or failure of the bank resuscitation effort. If we keep to the present course--socializing the losses from the unraveling of the banking system while taking the utmost pains to keep shareholders as nearly whole as possible--then it will amount to more than the last hurrah of a generation's worth of breathtaking financial plunder and wealth concentration. In that event, America will emerge from this crisis someday only to find the future prospects of most Americans drastically diminished by the sort of crippling debt burden that has forced many less powerful nations into semi-permanent peonage to the world's bankers. The distance from world empire to third-world domestic economy is shorter than we think. And shrinking.