Turns out we didn’t need “stealth socialist” Barack Obama to pervert capitalist America into a crumbling nationalized economy run in private by a dome-skulled kleptocracy as our nation’s battered military wastes away in the forgotten bummer of a civil war in Afghanistan. WAIT A MINUTE that is exactly what happened in the Soviet Union! And the so-called Republicans did it, because they are Fiscal Socialists!
Your editor was standing in the bowels of LAX a few weeks ago, waiting for the antiquated baggage conveyor to deliver whatever was left of his war suitcase, when he had the overwhelming feeling of being stuck in some early ’90s Eastern Bloc rundown government facility, maybe a train station in the Ukraine or a “department store” in Serbia. Everything was dirty and broken, dull people stood in dull clumps, afraid to talk or bitch too much as there were heavily armed cops everywhere, as always. The fluorescent lights blinked and buzzed sickly in the windowless chamber, there wasn’t even muzak or a Starbucks around.
It’s what America looks like, increasingly. The roads are potholed, the bridges collapsing, metro trains crash and kill as dull-eyed engineers peck text messages, airlines have become Aeroflot, dams and levees busting apart, yearlong waits to get a passport, maimed soldiers sent back to the endless war again and again, and a book-banning big-government cipher from Siberia is briefly popular for being a nasty moron.
Anyway, we were going to write about the sovietization of America’s financial system, so let’s find a way back to the subject at hand ….
“This is social democracy at it’s worst,” 80-year-old Federal Reserve historian Allan Meltzer told Bloomberg today, after Paulson’s weird plan was formally announced.
It’s the nationalization of the American free market. If Hugo Chavez seized the biggest insurance company and the biggest mortgage backers, wingnuts like Larry Kudlow would be losing their shit, demanding military invasions to save Global Capitalism, etc.
Now the government’s in the business of telling you what sort of financial bets you can make, too. Think something obvious like financials are going to tank? Well, too bad. No more short selling. It’s naughty.
“When Russia shut down its stock markets to avoid the global collapse sweeping the markets earlier this week, most of Wall Street shook its head,” David Weidner wrote at Marketwatch this morning. “The move smacked of totalitarianism and artificial manipulation, such a brazen intervention wouldn’t happen in a free market. Well, the Russians are having a good chuckle after Securities and Exchange Commission Chairman Christopher Cox, following the lead of the U.K.’s Financial Services Authority, initiated a ban in short selling for 799 U.S. financial institutions.”
And now John McCain will announce that he didn’t mean to say he would fire Cox, because he really meant he would re-hire him, because that’s how somebody told him markets work.
What’s the ultimate result of all this incredible manipulation and seizing of private investment and insurance corporations and printing $50 billion in new national debt to back money market funds? “A tourniquet for Wall Street,” says Marketwatch’s front page.
“A long way to zero for Dow: Up 400 Friday, flat on week.”
America just sold another half-trillion dollars of itself to China, all to keep the markets flat for a week in September.
And this does nothing to halt the actual cause of this financial collapse, the actual decreasing-by-the-day assets sitting on .13-acre exurban lots all over Florida and Michigan and the Southwest, from Dallas to San Francisco and everywhere in between: the single-family stick-and-stucco houses that were sold for double or triple what they were worth, even in good times.
Today, one-in-ten mortgages is either already in foreclosure or in default, nationwide. Even with foreclosure sales making up half of all purchases in collapsing markets like Southern California, there’s still a record inventory of houses for sale, and a record inventory of vacant homes across the country. And there are more than 9,000 new foreclosures every day.
A week ago, Paulson said: “The housing correction poses the biggest risk to our economy.” Nationalizing AIG and Fannie and Freddie and throwing $50 billion to keep money market funds at a buck a share is not going to change that.
