Saturday, 17 January 2009

Banks, Nationalization, and the Times' Spin

Written by  Charles Scaliger

MoneyIn an unwonted episode of lucidity, the New York Times proclaimed in a recent headlilne that the "Rescue of Banks Hints at Nationalization." Of course, the Times got most of it wrong — nothing in the recent spate of bailouts bears the remotest resemblance to President Andrew Jackson's shutting down of the Second Bank of the United States, as banking analyst, Gerard Cassidy, quoted in the Times piece, claims.

Nor are the megabanks in question "too big to fail," as the Times implies. They're merely part of a power structure that America's political and financial elites, whose interests the Times represents and wishes to perpetuate.

But Times writer Edmund Andrews has a point about nationalization. As the most recent bailout of Bank of America — a $120 billion aid package authorized last Thursday — shows, the federal government is determined to maintain our insolvent money-center banks at absolutely any cost, even if every American taxpayer must be beggared into the bargain. It was the comparatively sound Bank of America, after all, that was pressured by Treasury Secretary Henry Paulson and the Federal Reserve to put its own solvency on the line by absorbing Merrill Lynch last fall. That move crippled BOA, making yet another federal bailout necessary. It's worth noting that it was also BOA that protested the federal government's compelling of the big banks to accept partial government ownership of their assets late last year.

All of this — federal government ownership of banks coupled with unending bailouts — indeed constitutes a nationalization of the American banking system, a move deeper into full-blown socialism that will soon wipe out America's remaining economic base if allowed to continue unchecked.