25 September 2008

The "S" Word

There's been a good deal of talk about Socialism lately, thanks to the recent collapse on Wall Street. However, as someone who has fancied himself leaning heavily toward being a Social Democrat or Democratic Socialist (yes there is a difference), I'm decidedly less enthusiastic about our government's move to bail out troubled financial institutions than one would think a 'pinko-Leftist' would be.

I'm pleased that Congress appears to have put the breaks on Henry "PowerPlay" Paulsen and his original plan -- give him $750 billion, he'll give it away and save us all, just don't ask him any questions. However, even with the modified plan, I still wonder, perhaps selfishly: What's in it for me? As a taxpayer, I'm going to be part owner of some of the troubled institutions 'non-liquid assets'. Does that mean the Other Half and I and rest of the family can move into one of these 'Non-liquid assets' since our place it getting kinda small? What guarantees do we have that $750 billion is 'enough'? Other than a (temporary -- everyone knows we're only putting a band aid on the problem right now) end to 'the current crisis' what do we get for our tax dollars -- and will we get some of the money back?

Sweden appeared to have had the right idea when it went through a similar problem a few years ago:

Sweden did not just bail out its financial institutions by having the government take over the bad debts. It extracted pounds of flesh from bank shareholders before writing checks. Banks had to write down losses and issue warrants to the government.

That strategy held banks responsible and turned the government into an owner. When distressed assets were sold, the profits flowed to taxpayers, and the government was able to recoup more money later by selling its shares in the companies as well.

IMHO THAT'S the way to do it! The government doesn't just take over an institution, there are safeguards, guarantees, a reward for our national shared risk. But is something this on the table in Washington? Somehow I don't think so. Too "Socialistic" for our tastes in this country I'm afraid.

(Sigh) Oh well, I guess the [Class] Struggle continues: Back to the barricades!

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