Wednesday, November 26, 2008

Chicken Feed Follow Up

In the previous topics, Dave mentioned the following in the comments:

The Federal reserve is loaning seven trillion dollars to the US Government.

The US Government then turns around and buys stock in failing banks, and now motor companies.

When the government owns stock in business it has a vote in how that business is run. They can set terms for executive salaries and bonuses for instance.

And that is how America turns into a socialist nation.

Actually Dave, I agree with you (please don't faint). Although it is not socialism in the strict sense, it is definitely socialistic for the government to become a major stakeholder in the American economy.

I also agree that it was planned in advance to the extent that the credit bubble perpetrated by the banks and hedge fund operators had the same predictable outcome as any historical form of speculation.

However, it wasn't the MoveOn or Code Pink or International ANSWER types that perpetrated this. It was perpetrated by free market capitalists who saw an opportunity to get filthy rich, manipulated the government into going along with it and then stuck the rest of us with the bill when they knew it was over.

The only recourse left to avoid another depression was...wait for it...government spending to "save capitalism." We are so far from the producing-goods-and-services type capitalism that everyone expects that it isn't funny. Not funny at all.

Almost every reader here knows about the Savings & Loan scams, so this isn't anything new. The main difference here is an exponential increase in the amount of money involved and the fact that it seems as if nobody will be going to jail or get censured in Congress this time around.

It is a bit ironic that the people who brought quasi-socialism to America were the ones who railed most strongly against it, against regulation, and convincing so many to hate any kind government spending or involvement. For nearly 30 years, we've paved the way for mega-mergers, loosening of bank regulations, by thinking we were aiding a free market. It wasn't as free as the liars led us to believe.

Now there is no choice: the money is overflowing from the pockets of the perps as their prearranged deal with the government unfolds and makes us all poorer. We are shocked into compliance just as we were on September 11, 2001. Their assets are safe and ours are at risk and we must just lump it with no expectation of justice or true reform.

Dave is also correct when he says that government will get a bigger say in business. It will be interesting to see what choices government agencies responsible for investing make. There are a number of scenarios and, as with 9/11, the rapid changing of events along with the discretion granted by the concept of emergency means that we are prone to large instances of misconduct just as we've experienced in the post 9/11 wars (torture, extraordinary rendition, etc.). After the corporate infusion of money into the government by lobbyists decreased the interests of individuals in favor of corporations, so the infusion of money into business by the government will probably do the same. Business and government are creating a marriage made in Hell and the majority of people are the abused children of that marriage.

This is truly a learning moment. However, learning depends on seeing outside the left-right, Christian-secular, industry-intellectual box. People are kind of getting it at times, but not in large enough number or as angrily as they should. I suspect we will all muddle through blaming it on the boogie men dreamed up on our favorite political websites.

As an afternote, I found a breakdown at Talking Points Memo of how much money is going towards which programs in order to stave off financial collapse. Calling it all one thing is a bit of a misnomer since there are a number of programs going on to deal with it all.


The Moody Minstrel said...

There is actually a name for a government built on a close, cozy relationship between political and corporate leaders. It's called National Socialism, and there was a very good example of it in Germany in the late 1930s and 1940s.

Nowadays the term "fascism" seems to be more popular, though.

ladybug said...

My definition of Socialism includes SOCIAL healthcare, education, housing and the like.

But corporate welfare isn't socialism in my book. It's just giving no-strings attached money to a-holes that couldn't make it in our so-called "capitalist" society.

Investing in fellow Americans is somehow evil, but free money to rapacious corporations w/unethical CEO's is somehow "right"....

Dave said...

Probably what precipitated the current crisis the most was congress, in particular, Barney Frank and Chris Dodd who ran the commitee that oversees Fannie May and Freddy Mac. The government under the Clinton administration started requiring banks to offer subprime loans, a cute way of describing a loan to a client that was very likely not able to afford it.

The result was a large number of foreclosures. Unfortunately, many of these loans were repackaged into mortgage securities and sold as investments, so when the loans went bad, so did a lot of company portfolios.

All though Bush didn't create this problem, he did a lousy job of fixing it.

Don Snabulus said...

I suspect we will all muddle through blaming it on the boogie men dreamed up on our favorite political websites.

Yes, Don. I totally agree.