Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Virgin Media Fibre Broadband Installation - What to Expect, Quality of Wiring, Service etc. - 21st Jun 21
Feel the Inflationary Heartbeat - 21st Jun 21
The Green Superfuel That Could Disrupt Global Energy Markers - 21st Jun 21
How Binance SCAMs Crypto Traders with UP DOWN Coins, Futures, Options and Leverage - Don't Get Bogdanoffed! - 20th Jun 21
Smart Money Accumulating Physical Silver Ahead Of New Basel III Regulations And Price Explosion To $44 - 20th Jun 21
Rambling Fed Triggers Gold/Silver Correction: Are Investors Being Duped? - 20th Jun 21
Gold: The Fed Wreaked Havoc on the Precious Metals - 20th Jun 21
Investing in the Tulip Crypto Mania 2021 - 19th Jun 21
Here’s Why Historic US Housing Market Boom Can Continue - 19th Jun 21
Cryptos: What the "Bizarre" World of Non-Fungible Tokens May Be Signaling - 19th Jun 21
Hyperinflationary Expectations: Reflections on Cryptocurrency and the Markets - 19th Jun 21
Gold Prices Investors beat Central Banks and Jewelry, as having the most Impact - 18th Jun 21
Has the Dust Settled After Fed Day? Not Just Yet - 18th Jun 21
Gold Asks: Will the Economic Boom Continue? - 18th Jun 21
STABLE COINS PONZI Crypto SCAM WARNING! Iron Titan CRASH to ZERO! Exit USDT While You Can! - 18th Jun 21
FOMC Surprise Takeaways - 18th Jun 21
Youtube Upload Stuck at 0% QUICK FIXES Solutions Tutorial - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations Video - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations and Trend Analysis into Market Correction - 17th Jun 21
Stocks, Gold, Silver Markets Inflation Tipping Point - 17th Jun 21
Letting Yourself Relax with Activities That You Might Not Have Considered - 17th Jun 21
RAMPANT MONEY PRINTING INFLATION BIG PICTURE! - 16th Jun 21
The Federal Reserve and Inflation - 16th Jun 21
Inflation Soars 5%! Will Gold Skyrocket? - 16th Jun 21
Stock Market Sentiment Speaks: Inflation Is For Fools - 16th Jun 21
Four News Events That Could Drive Gold Bullion Demand - 16th Jun 21
5 ways that crypto is changing the face of online casinos - 16th Jun 21
Transitory Inflation Debate - 15th Jun 21
USDX: The Cleanest Shirt Among the Dirty Laundry - 15th Jun 21
Inflation and Stock Market SPX Record Highs. PPI, FOMC Meeting in Focus - 15th Jun 21
Stock Market SPX 4310 Right Around the Corner! - 15th Jun 21
AI Stocks Strength vs Weakness - Why Selling Google or Facebook is a Big Mistake! - 14th Jun 21
The Bitcoin Crime Wave Hits - 14th Jun 21
Gold Time for Consolidation and Lower Volatility - 14th Jun 21
More Banks & Investors Are NOT Believing Fed Propaganda - 14th Jun 21
Market Inflation Bets – Squaring or Not - 14th Jun 21
Is Gold Really an Inflation Hedge? - 14th Jun 21
The FED Holds the Market. How Long Will It Last? - 14th Jun 21
Coinbase vs Binance for Bitcoin, Ethereum Crypto Trading & Investing During Bear Market 2021 - 11th Jun 21
Gold Price $4000 – Insurance, A Hedge, An Investment - 11th Jun 21
What Drives Gold Prices? (Don't Say "the Fed!") - 11th Jun 21
Why You Need to Buy and Hold Gold Now - 11th Jun 21
Big Pharma Is Back! Biotech Skyrockets On Biogen’s New Alzheimer Drug Approval - 11th Jun 21
Top 5 AI Tech Stocks Trend Analysis, Buying Levels, Ratings and Valuations - 10th Jun 21
Gold’s Inflation Utility - 10th Jun 21
The Fuel Of The Future That’s 9 Times More Efficient Than Lithium - 10th Jun 21
Challenges facing the law industry in 2021 - 10th Jun 21
SELL USDT Tether Before Ponzi Scheme Implodes Triggering 90% Bitcoin CRASH in Cryptos Lehman Bros - 9th Jun 21
Stock Market Sentiment Speaks: Prepare For Volatility - 9th Jun 21
Gold Mining Stocks: Which Door Will Investors Choose? - 9th Jun 21
Fed ‘Taper’ Talk Is Back: Will a Tantrum Follow? - 9th Jun 21
Scientists Discover New Renewable Fuel 3 Times More Powerful Than Gasoline - 9th Jun 21
How do I Choose an Online Trading Broker? - 9th Jun 21
Fed’s Tools are Broken - 8th Jun 21
Stock Market Approaching an Intermediate peak! - 8th Jun 21
Could This Household Chemical Become The Superfuel Of The Future? - 8th Jun 21
The Return of Inflation. Can Gold Withstand the Dark Side? - 7th Jun 21
Why "Trouble is Brewing" for the U.S. Housing Market - 7th Jun 21
Stock Market Volatility Crash Course (VIX vs VVIX) – Learn How to Profit From Volatility - 7th Jun 21
Computer Vision Is Like Investing in the Internet in the ‘90s - 7th Jun 21
MAPLINS - Sheffield Down Memory Lane, Before the Shop Closed its Doors for the Last Time - 7th Jun 21
Wire Brush vs Block Paving Driveway Weeds - How Much Work, Nest Way to Kill Weeds? - 7th Jun 21
When Markets Get Scared and Reverse - 7th Jun 21
Is A New Superfuel About To Take Over Energy Markets? - 7th Jun 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Nationalization as a "Solution" to the Financial Crisis?

Politics / Nationalization Apr 15, 2009 - 06:21 PM GMT

By: Global_Research

Politics Best Financial Markets Analysis ArticleShamus Cooke writes: "… the word "nationalization" scares the hell out of people. And so the debate has been opened up now, and that's good. Let's talk about it." Rep. Maxine Waters (D-California)


As Wall Street deludes itself into thinking that the economy has finally “turned the corner,” the more intelligent economists continue sounding the alarm bells, pleading for a fundamental change in government policy  to avoid a devastating, systemic collapse.

These “radical” economists are not what you might expect.  They are well connected members of the political establishment, having worked in some cases for the International Monetary Fund (I.M.F.), Harvard, The New York Times, the Federal Reserve, etc.

As the economic crisis emerged, a few establishment notables came out strongly in favor for nationalizing the troubled banks, a sentiment now shared by many as the crisis deepens.  To date, this thinking has not found a solid reflection in the policies of the Obama administration.     

In fact, Obama, like his predecessor, has avoided “real” nationalization like the plague, meaning, that even in cases where the government owns a controlling stake in a major institution — A.I.G. for instance — the old shareholders and management remain in their places, a practice now referred to as “de-facto nationalization.”

Obama’s failed strategy has funneled a never-ending amount of taxpayer money — with little or no strings attached — to financial institutions in the hopes that everything will work out in the end.  This utterly ineffective approach is forcing establishment thinkers to say things out loud which were previously uttered in private cigar rooms.  The most notable establishment opposition to Obama’s plan is Nobel Prize winning economist Paul Krugman, quoted here in Newsweek:

“It's as if the president were determined to confirm the growing perception that he and his economic team are out of touch, that their economic vision is clouded by excessively close ties to Wall Street." (March 28, 2009)

In the same article we read: “Krugman portrays Treasury Secretary Tim Geithner and other top officials as, in effect, tools of Wall Street.”

Krugman is not alone.  Simon Johnson, former chief economist for the I.M.F., wrote a scathing article in the May edition of The Atlantic, called The Quiet Coup.  In it he compares the current economic situation in the U.S. to the destroyed economies he helped “restructure” while at the I.M.F.  Thus, he claims, the U.S. economy is in need of serious measures:

“If you hid the name of the country [the U.S.] and just showed them the numbers, there is no doubt what old I.M.F. hands would say: nationalize troubled banks and break them up as necessary.”

What Krugman, Johnson, and the rest of the establishment “oppositionists” worry most about is that, under the Obama plan, the banking system will continue to receive life support while nothing is done to address the fundamental weakness of the banks, leaving open the possibility that things may get worse.  Johnson explains:

“The Treasury is trying to negotiate bailouts bank by bank, and behaving as if the banks hold all the cards — contorting the terms of each deal to minimize government ownership while forswearing government influence over bank strategy or operations. Under these conditions, cleaning up bank balance sheets is impossible…only decisive government action — exposing the full extent of the financial rot and restoring some set of banks to publicly verifiable health — can cure the financial sector as a whole.”

Shockingly, Johnson goes even further, into linguistic territory rarely ventured by the establishment thinker:

“The second problem the U.S. faces — the power of the oligarchy — is just as important as the immediate crisis of lending. And the advice from the I.M.F. on this front would again be simple: break the oligarchy.”

Johnson details in length the rising power of the U.S. financial oligarchy, showing how they eventually monopolized political power.  He concludes that, if any progress is to be made towards an economic recovery, this group must be “broken.”   

However, Johnson quickly re-establishes his establishment roots by paraphrasing deceased economist Joseph Schumpeter: “Everyone has elites; the important thing is to change them from time to time.”

This “solution” inspires no one, minus Johnson’s colleagues.   

Another un-inspiring idea shared unanimously by the oppositionists is the notion that, once a troubled bank is nationalized, it must quickly be resold to the private investor, where it will be put back to use making private profit.

But even this drastic yet now-popular idea comes with hidden risks, elaborated here by David Sanger in The New York Times:

“…Mr. Obama’s advisers say they are acutely aware that if the government is perceived as running the banks, the administration would come under enormous political pressure to halt foreclosures or lend money to ailing projects in cities or states with powerful constituencies…”   (January 25, 2009)

In essence, this means that if the taxpayer owns the banks, they might demand that the banks be put to their use. 

There are in fact two types of nationalizations.  The first is the above mentioned tactic advocated by the establishment: the temporary seizure of failed institutions, a quick restructuring, and immediate sell-off to private investors.  This is viewed as an extreme but necessary measure to keep the status-quo (capitalism) in place; otherwise members of the establishment would never recommend such an action be taken.   

The second type of nationalization is what the establishment equates with Armageddon:  the state seizing control over key institutions and running them to the benefit of the majority of the population.  Of course, such a nationalization would likely never occur under the kind of state structure that is currently in place.  It could only happen as the result of a mass movement demanding its implementation.

Such an action would be the first step towards laying the foundation for a real and lasting social change.  Society cannot produce for human needs if financial institutions and industry are owned by tiny groups only interested in accumulating wealth and chasing profit, which is exactly what precipitated the current devastating economic crisis.

Also, most people are not interested in “breaking” a particular oligarchy, but all oligarchies, since the very existence of such a group implies a deep social disease.

It is to everyone’s benefit that the establishment has opened the debate over nationalization. But nationalization itself must benefit more than a tiny group of rich investors.  Hidden in the debate is the potential to change the world for the better. 

Shamus Cooke is a social service worker, trade unionist, and writer for Workers Action (www.workerscompass.org).  He can be reached at shamuscook@yahoo.com

Global Research Articles by Shamus Cooke

© Copyright Park Sang-seek , Global Research, 2009

Disclaimer: The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of the Centre for Research on Globalization. The contents of this article are of sole responsibility of the author(s). The Centre for Research on Globalization will not be responsible or liable for any inaccurate or incorrect statements contained in this article.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in