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Big_Bird
Joined: 31 Jan 2003
Location: Sometimes here sometimes there...
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 Posted: Mon Sep 29, 2008 8:15 pm Post subject: The left is coming to capitalism's rescue. |
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Perhaps. Actually, I read that sentence in an article, and I just could not resist that as a thread title, tehehe...
In Britain some are talking of nationalisation (or partial nationalisation) as one measure to deal with economic calamity. It occurred to me though, as I read it, that the word 'nationalisation' is probably not even printed in American English dictionaries. 
I've watched the economy for 30 years. Now I'm truly scared
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Worse, now that the system is in trouble, financiers are turning to taxpayers in the US and Britain for help without understanding the other key principal of fairness - that we will consider helping those who for no fault of their own get into trouble, but not those who freely created their own bad circumstances.
Hank Paulson certainly acted decisively in launching his plan, but the former Goldman Sachs CEO, who negotiated a special exemption from tax when he took the job, like his former Wall Street colleagues is not well endowed with the fairness gene. It polluted the very design of the scheme.
He knows that unless the US government does something comprehensive, the entire financial system is at stake, but his original plan was designed to bail out the system intact. It made no demands that any financial executives sacrifice pay or bonuses despite having driven their firms and wider economy to the point of bankruptcy. He does not want the government to provide new bank capital to help recapitalise a bust banking system. Instead, he wants the government to buy their toxic debt and so leave the banks unreformed. On top he wanted complete discretion to act as he chose without any oversight.
American economists of every persuasion signed a joint letter complaining not at the aim of the bail out, which is plainly vital, but for its lack of fairness. Conservative papers and politicians echoed the complaint. Suddenly, Wall Street is coming back to earth. The transactions from which it skims such riches are built on the savings of ordinary Americans to whom it has obligations, as it has to other Wall Street firms. What we know now about the yet to be agreed compromise is that Paulson has accepted Congressional oversight, will offer direct help to distressed US homeowners as well as banks, and will accept some constraints on the worst excesses of executive pay.
But the core proposal remains. The government will buy toxic debt rather than inject government funds into the banks' capital base, in other words, reject even partially nationalising the entire US banking system as the Swedes had to in 1992. I don't know - nobody does - whether the Paulson plan would be sufficient or whether ultimately the Americans will have to go for nationalisation. What I do know is that unless there is a radical and government-led change in ownership, structure, regulation and incentives so that the principles of fairness are put at the heart of the Anglo American financial system - proportionality of reward and fair distribution of risk - there is no chance of the return of trust and integrity upon which long-term recovery depends.
The political debate in Britain and America so far little reflects this need - but it will. Barack Obama's election as President is much more likely. And the discourse in Britain will follow. Brown may be crampingly cautious but, unlike Cameron, he does understand that without government action the restoration of trust and fairness may never happen. This week, I expect the nationalisation of the stricken Bradford & Bingley to join Northern Rock. It is but another in a long sequence of interventions that are imperative to save the system from its own proclivities. Once again, the left is coming to capitalism's rescue.
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Gopher
Joined: 04 Jun 2005
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| Posted: Mon Sep 29, 2008 8:38 pm Post subject: |
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Give me a break.
The first step in dealing with this as adults is doing away with heroes and villains and simply getting to work. |
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Tiger Beer
Joined: 07 Feb 2003
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| Posted: Mon Sep 29, 2008 8:39 pm Post subject: |
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'Nationalisation' is still and always will be a scarey word for ALL Democrats and Republicans. You have to be far far far left well beyond the Democrat Party to even consider it.
Just the idea of it is probably party responsible for what caused both parties to reject the Bailout today despite the financial industries being in dire conditions. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Mon Sep 29, 2008 8:43 pm Post subject: |
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Nothing needs to be rescued. Banks fail and America has experienced and excellent bankruptcy courts that are more than able to cut and clean the remains up.
A recession is part of capitalism. I don't know why we've become so scared of them. |
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jvalmer
Joined: 06 Jun 2003
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| Posted: Mon Sep 29, 2008 9:23 pm Post subject: |
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| Why are Americans so afraid of socialism and nationalization? Nothing wrong with those two things in moderation. Key, essential things, should be kept in the hands of the government in order to make it affordable for the citizens. |
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Jandar
Joined: 11 Jun 2008
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| Posted: Tue Sep 30, 2008 12:51 am Post subject: |
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| They may not be using the word but Fredie and Fannie were for all intents and purpose "Nationalized". |
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sojourner1
Joined: 17 Apr 2007
Location: Where meggi swim and 2 wheeled tractors go sput put chug alugg pug pug
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| Posted: Tue Sep 30, 2008 1:08 am Post subject: |
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America needs to hold a special emergency common vote election on what to do with $700b and let the people decide what is best. Give us at least 2 options that make sense and the 1 option they are trying to force down our throats.
It appears we have a socialist system for corporations and executives, but a capitalist system for your average consumers working average jobs. Capitalism is about competition where you take risks and suffer losses without financial aid help. It's also where prices and wages are determined by the people; not corporations. Socialism is where the government ensures everyone has food, housing, and health care to survive by owning the means to produce food, housing, and services for everyone.
What we have today is plutocracy. A system ran by the rich serving the rich at the cost of the common people who already had been duped into huge debt to produce robust retail sales temporarily. The executives even charged the government to pay out economic stimulus checks to further get more out of an already drained tapped out American consumer. Their concept of a strong economy is short term gains and then they expect Uncle Sam and the people to bail them out when the chips are down.
If I take the risk of starting a small business and fail, it's on me as no one is going to actually help me get on my feet again. If a corporation fails, then the government is pressured into helping them reward the ill performing executives as they walk out the door. This ensures their golden parachutes and that they continue to get capital gains on their stock. Talk about rewarding bad behavior and promoting a system that fails the people and the world. It's bad business. I say no to giving them $700b. Use it to rebuild the American economy with new leadership who are held accountable for corruption; not fix a failed flawed concept ran by a bunch of crooks.
We have given them crooks everything and a whole lot more. It's time they give something back to us. It's high time they give us an economic system that works for the people, by the people. A system that offers jobs and physical growth opportunities on US soil. People needs jobs to keep the economy strong; not debt! What a fouled up concept centering around debt we've had for years. And the government supported it by borrowing from China. Of course the corporations have manipulated the US government for years. This whole boondoggle is the engineering of the corporate elite; not solely the US governments. Our government is a pushover weakling that puts on the image it's in control to protect the majority interests. It's all a big lie engineered by the crooks and they must be stopped before they really crash the party.
America really should hold a special election right now to determine what to do with $700b. A common voting system where each and every vote truly counts; no electoral state votes nonsense. Electoral voting is the big major flaw in Americas concept of democracy.
We're all going to ask. "How did we get this wrong?" We let crooks run the country and gave them too many chances that they just took advantage of to make more money for nothing. |
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aka Dave
Joined: 02 May 2008
Location: Down by the river
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| Posted: Tue Sep 30, 2008 3:21 am Post subject: |
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| Tiger Beer wrote: |
'Nationalisation' is still and always will be a scarey word for ALL Democrats and Republicans. You have to be far far far left well beyond the Democrat Party to even consider it.
Just the idea of it is probably party responsible for what caused both parties to reject the Bailout today despite the financial industries being in dire conditions. |
Actually, some mainstream economists have advocated nationalizing some of the banks, selling of the bad paper, then re-privatizing them when they're stable enough to survive.
I have no idea if it's a viable idea, but this is Alice in Wonderland atm. No seems to know exactly what to do. |
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aka Dave
Joined: 02 May 2008
Location: Down by the river
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| Posted: Tue Sep 30, 2008 3:33 am Post subject: |
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| mises wrote: |
Nothing needs to be rescued. Banks fail and America has experienced and excellent bankruptcy courts that are more than able to cut and clean the remains up.
A recession is part of capitalism. I don't know why we've become so scared of them. |
This isn't about a recession. This is about a depression, with 10 years of no growth. Life destroying economic consequences.
http://www.dailykos.com/storyonly/2008/9/29/143536/436/784/614495
If there is not credit/liquidity available in the economy, the economy dies.
I mean it goes belly up and it can happen again as it did in the Great Depression.
Further, no one even *knows* how much bad paper there is. The losses are hidden. The profits have already been pocketed. Our economy could be the Titanic streaming into a huge ice berg.
What we do know that a lot of the reality is perception. If there is a collosal loss of confidence and there is a run on the banks we're looking at a full-blown disaster.
I was reading the odious Weekly Standard today. It's the home of crazy right wing neocons. The writer openly admitted every single right wing economist he talked to said the situation was very, very grave. And he commented that all the moronic right-wing politicians who have no knowledge of economics said it would "just effect some banks" .
So who ya gonna believe? The hillbillies up in the house or people who've actually studied economics? |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Tue Sep 30, 2008 6:17 am Post subject: |
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| aka Dave wrote: |
| mises wrote: |
Nothing needs to be rescued. Banks fail and America has experienced and excellent bankruptcy courts that are more than able to cut and clean the remains up.
A recession is part of capitalism. I don't know why we've become so scared of them. |
This isn't about a recession. This is about a depression, with 10 years of no growth. Life destroying economic consequences.
http://www.dailykos.com/storyonly/2008/9/29/143536/436/784/614495
If there is not credit/liquidity available in the economy, the economy dies.
I mean it goes belly up and it can happen again as it did in the Great Depression.
Further, no one even *knows* how much bad paper there is. The losses are hidden. The profits have already been pocketed. Our economy could be the Titanic streaming into a huge ice berg.
What we do know that a lot of the reality is perception. If there is a collosal loss of confidence and there is a run on the banks we're looking at a full-blown disaster.
I was reading the odious Weekly Standard today. It's the home of crazy right wing neocons. The writer openly admitted every single right wing economist he talked to said the situation was very, very grave. And he commented that all the moronic right-wing politicians who have no knowledge of economics said it would "just effect some banks" .
So who ya gonna believe? The hillbillies up in the house or people who've actually studied economics? |
http://www.salon.com/opinion/greenwald/radio/2008/09/23/sheehan/ |
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Leslie Cheswyck
Joined: 31 May 2003
Location: University of Western Chile
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