Indeed. Those same people who rail against national health care support bailouts for poorly run companies. Socialism only seems to be a problem for them when it is benefiting those who can’t afford to pay off legislators.
No wonder our country is a mess.
RGE – Nouriel Roubini’s Global EconoMonitor
A fortiori the same public takeover should have been done in the case of Countrywide, the poster child of reckless mortgage lending and of the current mortgage disaster. Instead, rather than kicking out a reckless CEO – whose actions are now under SEC investigation – and putting the lender under public control, Countrywide has been rewarded with $51 billion of public money that was provided in a stealth bailout operation while the current shareholders and incompetent managers are still firmly in charge of the bank.
The right approach would have been – as Martin Wolf suggested for Northern Rock – to take over the bank and put it formally under public control. Instead the US Treasury, the FHFB, the Fed and the banking regulators have been tacit and/or explicit accomplices of the stealth public bailout of most egregious example of reckless and predatory lending, the core institution at the center of a subprime and mortgage disaster that is now taking the entire US economy into a recession.
The lesson of this sad and sleazy episode is that when profits are privatized and losses are socialized we get sleaze capitalism and corporate welfare that becomes public bailout of reckless lenders. All this from a US administration that hypocritically praises every other day the virtues of private markets capitalism. For all of us who do truly believe in free market economies where a variety of public goods are provided by governments and the financial sector is properly supervised and regulate this is not a capitalist system but rather socialism for the rich.
No Responses