Thursday, September 18, 2008

Economic Darwinism at its Zenith

Rainman's satire nails it every time.

And adieu Stephen, best wishes for you. I already added magazine to my bloglist and am making a post for everyone to understand wth is going on.

The Political Junkies:

Roubini’s essential thesis:

Today . . . the US has performed the greatest nationalization in the history of humanity. By nationalizing Fannie and Freddie the US has increased its public assets by almost $6 trillion and has increased its public debt/liabilities by another $6 trillion. The US has also turned itself into the largest government-owned hedge fund in the world: by injecting a likely $200 billion of capital into Fannie and Freddie and taking on almost $6 trillion of liabilities of such GSEs the US has also undertaken the biggest and most levered LBO (“leveraged buy-out”) in human history that has a debt to equity ratio of 30 ($6,000 billion of debt against $200 billion of equity).

So now Comrades Bush, Paulson and Bernanke (as originally nicknamed by Willem Buiter) have now turned the USA into the USSRA (the United Socialist State Republic of America). Socialism is indeed alive and well in America; but this is socialism for the rich, the well connected and Wall Street. A socialism where profits are privatized and losses are socialized with the US tax-payer being charged the bill of $300 billion.

This biggest bailout and nationalization in human history comes from the most fanatically and ideologically zealot free-market laissez-faire administration in US history. These are the folks who for years spewed the rhetoric of free markets and cutting down government intervention in economic affairs. But they were so fanatically ideological about free markets that they did not realize that financial and other markets without proper rules, supervision and regulation are like a jungle where greed – untempered by fear of loss or of punishment – leads to credit bubbles and asset bubbles and manias and eventual bust and panics.

In TPJ’s view, “socialism where profits are privatized and losses are socialized with the US tax-payer being charged the bill” is simply an extension of the new Republican doctrine of an “ownership society.” The new Republican doctrine simply values the “ownership” of the instruments of America’s capital over the value of the production of profits represented by those instruments.

If this sounds like the classic balance of power between ownership and labor – it is, but it extends far beyond those classic lines of political policy. In order to protect investments, Republicans are now willing to protect corporate profits at any cost as a mechanism of protecting the investor class. In its grand scope, Republicans have over the past eight years:

1. Relieved a growing number of employers from providing health insurance with the highest rates of uninsured employees in history;

2. Dismantled environmental regulations to protect corporate profits;

3. Distorted, manipulated and falsified scientific research to deny global warming as a political strategy to protect corporate profits;

4. Extended the biggest share of tax breaks to the investor class;

5. Devalued the US Dollar to lows not seen in history and threatening the US Dollar’s position as the reserve currency of the world while;

6. Driving up prices that Americans pay for all imported goods, particularly the price of energy;

7. Deregulated reasonable controls on the financial markets that permitted the creation of investment vehicles that led to the housing crisis and the credit crunch while;

8. Using tax dollars to protect investors from losses.

All these developments represent the Republican “ownership society.” The examples are just a few from among a plethora; globalization in the context of the “ownership society” could fill countless articles. It is economic Darwinism at its zenith.

It also squares with the Republican philosophy of shrinking government to the size of a bathtub and then drowning it. Using tax dollars to bail out Fannie Mae and Freddie Mac, as well as the bail outs to come, make the cost of the war in Iraq pale in comparison. Ultimately, however, the Federal government will have to cut social programs to pay for the increasing debt. Republicans will then have dismantled the social safety nets constructed over generations while enriching corporate America.

Question for Americans: is this the policy you want guiding America for the next eight years?

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