October 15, 2008

Nationalization, Not Investment or Bailout

The financial crisis has seemed too serious to nitpick about, but I won't ignore the government "investment" in the banking sector.

A number of the big banks didn't want government money, but for practical purposes it was mandatory:
Under a programme described by President Bush as "unprecedented and aggressive", the US treasury will buy minority stakes in nine leading banks including Goldman Sachs, JP Morgan, Bank of America and Citigroup. Thousands of community banks will be eligible to follow.

Many of Wall Street's top banks were unwilling to take the money, fearing it would be seen as an admission of weakness, but they were given little choice by the US treasury secretary, Henry Paulson. In a televised address from the White House, Bush stressed that the measures were temporary and that banks would buy back the government's shares once the economy recovers: "These measures are not intended to take over the free market, but to preserve it." [hyperlink is mine, not the Guardian's--gs]
So it is necessary to destroy the free market in order to save it. Having stuck its nose under the tent, the camel will be content. Uh huh.

Intrade or somebody should start a long-term contract to see just how "temporary" those measures will be, especially with an Obama administration.

Addendum 20081018. This piece recalls that "emergency" Depression-era farm bailouts remain in place todday, and the programs have largely changed into corporate welfare from their original purpose of bailing out family farms.)

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