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All of what follows should be taken with a grain of salt, because I really don't know what I'm talking about here. The American Fascism Clock needs to be recalculated using some kind of, um, derivatives. And futures. And of course, mort-guages -- a measure of the length of time it takes for a major investment bank to die after supporting dubious lending practices that have contributed to a recession.
Except the point is actually that this span never ran out for Bear Stearns, because government came to the rescue and basically nationalized them, taking control of their portfolio in a move that, at first glance, is vaguely reminiscent of a favored move of left-wing dictators. Except not really, because the whole point of the maneuver and an accompanying $30 billion loan is to limit financial risks and help smooth JP Morgan Chase's buyout of the company. This looks a lot like the "merging of state and corporate power" which is how Italian dictator Benito Mussolini probably never actually described fascism.
The other major government action that accompanied the Bear Stearns deal was the opening of an unlimited lending program for investment banks in general, probably at wholesale rates -- like the $200-billion-limit program announced last Tuesday, which didn't have the hoped-for positive effect on the stock market. Whether any of this will have the desired effect over a period longer than a week or two is unknown, but Treasury Secretary Henry Paulson says they had to try. After all, the name of the game here is preventing the next Black Tuesday, which is to say trying to eliminate the perception that the financial sector is collapsing -- because on the trading floor, perceptions rapidly become realities.
Is it the government's job to fix things just because it has more money and power than anyone else, or because the big subprime lenders have forced its hand (specifically, forced it to dump money on them)? Well-known newspaper commentator Ellen Goodman quotes Barney Frank, chairman of the House Financial Services Committee, as saying that "People in the financial community were able to take sectors of the economy hostage and we have to pay a ransom. The best we can hope for is to keep the ransom as low as possible and help the least undeserving." (The only similar quote from Frank that I could find elsewhere is from a transcript of PBS's Nightly Business Report, where he doesn't blame people but rather the "absence of sensible regulation" for taking "some parts of our economy hostage.") This sort of language raises the paranoid specter of corporate conspiracies to defraud the government by threatening to destroy the economy, whose success in turn suggests "the growth of private power to a point where it becomes stronger than [the] democratic state itself. That, in its essence, is fascism," according to Franklin Delano Roosevelt, who was President throughout most of the Great Depression.
But here's where I get confused again, because quite apart from the fact that I don't like paranoia, that article featuring Henry Paulson says the Bear Stearns deal basically follows "a procedure from the Depression era," when saving the economy was Democrats' way of proving ourselves to be the true Party of the People. So who knows, maybe this buyout/risk-management exercise does still count as liberal somehow, despite being enacted by the most virulently right-wing administration in living memory. Hooray for the political Möbius strip.
Except the point is actually that this span never ran out for Bear Stearns, because government came to the rescue and basically nationalized them, taking control of their portfolio in a move that, at first glance, is vaguely reminiscent of a favored move of left-wing dictators. Except not really, because the whole point of the maneuver and an accompanying $30 billion loan is to limit financial risks and help smooth JP Morgan Chase's buyout of the company. This looks a lot like the "merging of state and corporate power" which is how Italian dictator Benito Mussolini probably never actually described fascism.
The other major government action that accompanied the Bear Stearns deal was the opening of an unlimited lending program for investment banks in general, probably at wholesale rates -- like the $200-billion-limit program announced last Tuesday, which didn't have the hoped-for positive effect on the stock market. Whether any of this will have the desired effect over a period longer than a week or two is unknown, but Treasury Secretary Henry Paulson says they had to try. After all, the name of the game here is preventing the next Black Tuesday, which is to say trying to eliminate the perception that the financial sector is collapsing -- because on the trading floor, perceptions rapidly become realities.
Is it the government's job to fix things just because it has more money and power than anyone else, or because the big subprime lenders have forced its hand (specifically, forced it to dump money on them)? Well-known newspaper commentator Ellen Goodman quotes Barney Frank, chairman of the House Financial Services Committee, as saying that "People in the financial community were able to take sectors of the economy hostage and we have to pay a ransom. The best we can hope for is to keep the ransom as low as possible and help the least undeserving." (The only similar quote from Frank that I could find elsewhere is from a transcript of PBS's Nightly Business Report, where he doesn't blame people but rather the "absence of sensible regulation" for taking "some parts of our economy hostage.") This sort of language raises the paranoid specter of corporate conspiracies to defraud the government by threatening to destroy the economy, whose success in turn suggests "the growth of private power to a point where it becomes stronger than [the] democratic state itself. That, in its essence, is fascism," according to Franklin Delano Roosevelt, who was President throughout most of the Great Depression.
But here's where I get confused again, because quite apart from the fact that I don't like paranoia, that article featuring Henry Paulson says the Bear Stearns deal basically follows "a procedure from the Depression era," when saving the economy was Democrats' way of proving ourselves to be the true Party of the People. So who knows, maybe this buyout/risk-management exercise does still count as liberal somehow, despite being enacted by the most virulently right-wing administration in living memory. Hooray for the political Möbius strip.
