Yesterday, Marc and Monique noted that the “stimulus” sticker is being slapped on boxes of the Democrats favorite things. It may be the giddy air of Washington, these days, that brought forth from House Speaker Nancy Pelosi the comment: “Would we have ever thought we would see the day when we’d be using that terminology – ‘nationalization of the banks?'”
With the direction in which the federal government is going, I fear that “stimulus” will prove to mean “national collapse.” From the proximate link (emphasis added):
Many believe that form of hybrid ownership – part government, part private, with the responsibilities of ownership unclear – will not prove workable.
“The case for full nationalization is far stronger now than it was a few months ago,” said Adam Posen, the deputy director of the Peterson Institute for International Economics. “If you don’t own the majority, you don’t get to fire the management, to wipe out the shareholders, to declare that you are just going to take the losses and start over. It’s the mistake the Japanese made in the ’90s.
“I would guess that sometime in the next few weeks, President Obama and Tim Geithner,” he said, referring to the nominee for Treasury secretary, “will have to come out and say, ‘It’s much worse than we thought’ and just bite the bullet.”
That’s speculation from a think-tanker, of course, but consider the prospect’s implications. Bank management will face national politicization of their jobs. Private shareholders will have less incentive to invest. The federal government will have even more power to refashion our financial system based on its own impressions of economic reality and “social justice.”
This path was mapped in the very first leap toward bailouts, last year, when America was assured of the necessity and everybody brushed off the natural tendencies of government as a consideration. The only question, at this point, is whether the stumbling beast can be stopped.