Spring Break
Economic bailout: Socialism to the rescue?
Sam Chenkin
Issue date: 9/26/08 Section: Ed-Op
But all is not lost - do not fear - the federal government is here!
Caught between a desire to let shareholders bear the brunt of their own folly and a need to protect the American people, the feds have made hard choices. Caution is winning out, and financial giants have not been allowed to fail thus far. U.S. Treasury Secretary Henry Paulson himself said it was tremendously painful "to have the American taxpayer put in this position, but it is better than the alternative."
This latest bailout could signal a return of New Deal ideology, or at least a burnt-out wreck of its former glory. Unlike last time, the government's involvement is limited to buying back bad debt and is unlikely to gain new powers to push capital directly to consumers. President Bush is pushing for sweeping changes to the way the federal government functions. Directly influencing the market in this way is uncharted territory, and his plan calls for little or no oversight.
The potential pitfalls are huge. The government would be able to amass far more than $700 billion in outstanding bills by purchasing debt high and selling it low. The powers the government would gain have the potential to add trillions to the national debt. Efforts by Congressional Democrats to add oversight and the power to directly mitigate the foreclosure crisis have met stumbling blocks, but perhaps they will succeed.
If they do, perhaps Democrats can find their feet amongst the rubble of Wall Street. Perhaps the balance of political power is shifting. This is evidence for the cyclical nature of American politics, which now, finally, seems to be turning full circle. The age of unbridled capitalism may be coming to an end - brought on not by love or violent revolution but by the implosion of the financial system.
Surprisingly, the capitalist swine do not seem particularly unhappy by this change. Despite their long-winded speeches about the power of the market to self regulate, they seem unwilling to let it do so. A free market is great when the potential for profits is high, but when business is suffering, it's suddenly time for the government to "do its job."
But of course, the sinking firms whisper, the government can't be allowed to do its job too well. It must act immediately to fix a problem created by a lack of regulation; controls and accountability, they say, can wait.
Thus, this recent cry for socialism is likely nothing more than capitalism in new guise - an attempt to shift debt to a new player in order to return to greater and greater profits.
The U.S. must not sink back into the complacent, terrified state it resided in after Sept. 11, 2001. Our Congress must remain strong, our investors steady. The current proposed law contains far too little oversight. We must not allow firms a free ticket out of debt, only so they can bring our economy down again. And we must be ever vigilant to the ploys and wiles of capitalism.
Sam Chenkin is a pre-junior majoring in information systems. He can be reached at op-ed@thetriangle.org.
Caught between a desire to let shareholders bear the brunt of their own folly and a need to protect the American people, the feds have made hard choices. Caution is winning out, and financial giants have not been allowed to fail thus far. U.S. Treasury Secretary Henry Paulson himself said it was tremendously painful "to have the American taxpayer put in this position, but it is better than the alternative."
This latest bailout could signal a return of New Deal ideology, or at least a burnt-out wreck of its former glory. Unlike last time, the government's involvement is limited to buying back bad debt and is unlikely to gain new powers to push capital directly to consumers. President Bush is pushing for sweeping changes to the way the federal government functions. Directly influencing the market in this way is uncharted territory, and his plan calls for little or no oversight.
The potential pitfalls are huge. The government would be able to amass far more than $700 billion in outstanding bills by purchasing debt high and selling it low. The powers the government would gain have the potential to add trillions to the national debt. Efforts by Congressional Democrats to add oversight and the power to directly mitigate the foreclosure crisis have met stumbling blocks, but perhaps they will succeed.
If they do, perhaps Democrats can find their feet amongst the rubble of Wall Street. Perhaps the balance of political power is shifting. This is evidence for the cyclical nature of American politics, which now, finally, seems to be turning full circle. The age of unbridled capitalism may be coming to an end - brought on not by love or violent revolution but by the implosion of the financial system.
Surprisingly, the capitalist swine do not seem particularly unhappy by this change. Despite their long-winded speeches about the power of the market to self regulate, they seem unwilling to let it do so. A free market is great when the potential for profits is high, but when business is suffering, it's suddenly time for the government to "do its job."
But of course, the sinking firms whisper, the government can't be allowed to do its job too well. It must act immediately to fix a problem created by a lack of regulation; controls and accountability, they say, can wait.
Thus, this recent cry for socialism is likely nothing more than capitalism in new guise - an attempt to shift debt to a new player in order to return to greater and greater profits.
The U.S. must not sink back into the complacent, terrified state it resided in after Sept. 11, 2001. Our Congress must remain strong, our investors steady. The current proposed law contains far too little oversight. We must not allow firms a free ticket out of debt, only so they can bring our economy down again. And we must be ever vigilant to the ploys and wiles of capitalism.
Sam Chenkin is a pre-junior majoring in information systems. He can be reached at op-ed@thetriangle.org.
Viewing Comments 1 - 2 of 2
Marc
posted 10/06/08 @ 9:50 PM EST
I agree with many of your points, but I do not see the problem as stemming from a lack of regulation. Regulation is one of the sources of the problems. (Continued…)
Benjamin Farabelli
posted 10/10/08 @ 5:56 AM EST
I think we need more regulations but that will only be effective until unethical people find ways around the regulations. This country is no longer run by the people but by corporations. (Continued…)
Post a Comment