Tuesday, October 14, 2008

Welcome to the Socialist USA

How the Socialist Swedes cured a banking crisis in 1992
A banking system in crisis after the collapse of a housing bubble. An economy hemorrhaging jobs. A market-oriented government struggling to stem the panic. Sound familiar?
It does to Sweden. The country was so far in the hole in 1992 — after years of imprudent regulation, short-sighted economic policy and the end of its property boom — that its banking system was, for all practical purposes, insolvent.
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.
“If I go into a bank,” said Bo Lundgren, who was Sweden’s deputy minister of finance at the time, “I’d rather get equity so that there is some upside for the taxpayer.”
The New York Times

The American Socialist Cure
President Bush today announced a $250 billion plan by the government to directly buy shares in the nation's leading banks, saying the drastic steps were "not intended to take over the free market but to preserve it." (Say what????)
Nine major banks will participate initially including all of the country's largest institutions, he announced, in a move that sent stocks soaring on Wall Street.
Some of the nation's largest banks had to be pressured to participate by Treasury Secretary Henry Paulson, who wanted healthy institutions that did not necessarily need capital from the government to go first as a way of removing any stigma that might be associated with banks getting bailouts. "We regret having to take these actions," Paulson said. "Today's actions are not what we ever wanted to do — but today's actions are what we must do to restore confidence to our financial system."
Call it what you will, it is partial nationalism of the country's largest banks.
Boy, I’ll bet the conservatives won’t put up with this for a minute! But wait, these ARE the conservatives. If this is what conservatives do, then those nasty liberals must be absolutely giddy.
Socialist Sweden only spent 4% of its GDP for its socialist cure. The Socialist US proposes to spend upward of 5%.
Nationalizing the banks was suggested to FDR after he took office in the great depression, but FDR had no intention of taking such a radical step. Instead, he declared a "national bank holiday," closing all banks, purportedly in order to give inspectors time to review their solvency. FDR declared that only those banks in sound financial health, those which had passed inspection, would be allowed to reopen.
Say that again . .
FDR declared that only those banks in sound financial health, those which had passed inspection, would be allowed to reopen.
We have precedent for the problem and precedent for the solution. We are not following it because that would cause inconvenience for people and could possibly cost the major parties to lose whatever small shred of credibility they retain.

1 comment:

  1. vote for osama obama and see whos socialist


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