When I heard Republican Sen. Lindsay Graham of South Carolina call for bank nationalization, and Sen. Chuck Schumer say “well …. let’s hold on a little longer,” I considered re-reading Alice in Wonderland. Schumer’s reluctance merely exposes him as a liberal pawn of Wall Street (there was never much doubt about that), but in fact it’s now hard to find an economist who does not favor nationalization as the only means of removing toxic assets from bank balance sheets and restarting lending.
Without credit, no amount of stimulus can bring economic recovery. You might get hired in one of the Recovery Act projects, but you won’t be able to get a loan for a car, house, washing machine, etc.
(Here’s one idea for the Think Big record: Establish a national bank to perform essential financial functions that are not performed by the private sector, including a modern equivalent postal savings accounts to provide savings and credit services to all residents. Low and mid-level professionals and managers from the defunct private sector could provide the necessary technical expertise. Then the loans could start flowing.)
In the case of Graham — even though he voted in lockstep with the Republican no-nothings and ostriches — he does not appear to be a bankers’ fool. But, is it real, or fake?
Why is nationalization the only means of restoring credit? Because bank stockholders and executives, even those already receiving public assistance, keep lying about the fact that their companies are insolvent. Why shouldn’t they lie? Telling the truth leads to the same conclusion, only sooner — they are out of business.
So, they are grasping at every public dollar they can, and spending it on themselves rather than loans, before the ax falls. Some are no doubt gaining revelation and religion in the faint hope that their moral excesses will be forgiven and the wand of wealth will favor them again!
Treasury Secretary Timothy Geithner’s apparent stumble on the bank plan shows the profound consternation of the president’s top economic team at the challenge of confronting the bankrupt, but still awesome and powerful interests embraced in the term “U.S. finance capital.” This group is pulling out all the stops to maintain its ruling positions and prerogatives.
The big question is: Can a team composed of people who have spent much of their professional lives as part of this ruling culture, and who have personally benefited immensely from it, embrace policies that put the interests of the people, and of their country, first? Even if it means confiscation of perhaps trillions of dollars of wealth without compensation or payoffs to stockholders, or the executive whose arrogance contributed so deeply to the crash?
We are going to find out very soon. But the answer lies in how firmly the people mobilize to enforce the mandate they gave President Obama: jobs, income, health, retirement, peace, education — before insuring the survival of ruined bankers.
There’s calling for nationalization — then there is actually nationalizing. There is ridding the credit markets of worthless assets — then there is actually lending money to individuals and businesses. There is calling for accountability — then there is actually arresting the crooks. There is calling for saving the financial system — then there is actually placing public control over the spending of public monies to see that the public interest — restarting lending — is enforced.
As none other than Vladimir Lenin pointed out in a famous pamphlet during the failed 1905 Russian revolution, when democratic forces attempted to overthrow the Tsarist autocracy and establish a democratic republic: “There is all the difference in the world between calling for a Constituent Assembly, and actually constituting one!”
The difference, in this writer’s view, is the difference between genuine socialist, genuine democratic activity — and opportunism. In 1905, opportunism prevailed, a fake democratic structure was created, but the autocracy remained.
A similar danger posed by the potential chasm between words and deeds in the repair of the financial system is before us now.
jcase4218 @gmail.com
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