Guardian published online:
Public losses for private gain The effective nationalisation of huge sectors of the economy means US taxpayers are picking up the tab for failing banks
by: Nouriel Roubini - guardian.co.uk - Thursday September 18 2008
This transformation of the US into a country where there is socialism for the rich, the well-connected and Wall Street (ie, where profits are privatised and losses are socialised) continues today with the nationalisation of AIG.
This latest action on AIG follows a variety of many other policy actions that imply a massive – and often flawed – government intervention in the financial markets and the economy: the bail-out of the Bear Stearns creditors; the bail-out of Fannie and Freddie; the use of the Fed balance sheet (hundreds of billions of safe US Treasuries swapped for junk, toxic, illiquid private securities); the use of the other GSEs (the Federal Home Loan Bank system) to provide hundreds of billions of dollars of "liquidity" to distressed, illiquid and insolvent mortgage lenders; the use of the SEC to manipulate the stock market (through restrictions on short sales).
Then there's the use of the US Treasury to manipulate the mortgage market, the creation of a whole host of new bail-out facilities to prop and rescue banks and, for the first time since the Great Depression, to bail out non-bank financial institutions.
This is the biggest and most socialist government intervention in economic affairs since the formation of the Soviet Union and Communist China. So foreign investors are now welcome to the USSRA (the United Socialist State Republic of America) where they can earn fat spreads relative to Treasuries on agency debt and never face any credit risks (not even the subordinated debt-holders who made a fortune yesterday as those claims were also made whole).
Like scores of evangelists and hypocrites and moralists who spew and praise family values and pretend to be holier than thou and are then regularly caught cheating or found to be perverts, these Bush hypocrites who spewed for years the glory of unfettered Wild West laissez-faire jungle capitalism allowed the biggest debt bubble ever to fester without any control, and have caused the biggest financial crisis since the Great Depression.
They are are now forced to perform the biggest government intervention and nationalisations in the recent history of humanity, all for the benefit of the rich and the well connected. So Comrades Bush and Paulson and Bernanke will rightly pass to the history books as a troika of Bolsheviks who turned the USA into the USSRA.
Zealots of any religion are always pests that cause havoc with their inflexible fanaticism – but they usually don't run the biggest economy in the world. These laissez faire voodoo-economics zealots in charge of the USA have now caused the biggest financial crisis since the Great Depression and the nastiest economic crisis in decades.
When thinking of the financial crisis - bailout, replete with fear-mongering at a severe though beliveable level - holding your economy hostage to be killed if not paid the ransom - I see in my mind the opening image of that ax of power with the several supporting sticks bound tightly to it. The Bush-Cheney federal government, Wall Street investment outlets, pension funds, insurance companies, commercial banks, hedge funds, S&L and community banks, mutual funds, municipal bond underwriters, a Wall Street insider as Treasury Sectetary, all of them prospering or facing a better-than-market prosperity under Treasury and Fed bailout proposals, floated with much pomp and fearful tidings then promptly enacted with time for a little bicameral theater, by Congress and signed by W into law. They did not have to wear masks or wield weapons while seizing the wealth, for sharing of the wealth, within ranks.I have seen more than once mainstream media calling the bailout production "socialism." The above excerpt is not unique that way, and instead is recent, and representative. I expect use of the term "socialism" that way is aimed at being ironic.
I admit my limitations. I have trouble with politically charged terms - with labels that get bandied about loosely sometimes, (Sarah Palin - Michele Bachmann style). I take the easy course and figure the talking head pundit might not know what [s]he is talking about but is nonetheless unwilling to shut up. Or is being paid for writing publishable material.
Links, to help me in ways a reader comment or two might aid, are here, here, here, here, here, here, here and here.
I also have in mind an image of our Treasury Secretary on a horse:
Highway Robbery by a band of uncommon criminals.