Nationalization - Wall Street learns to sing “The Internationale”
October 11, 2008
by Bryan Zepp Jamieson
Wall Street learns to sing “The Internationale”
Everyone’s watching the G7 meeting in Washington this weekend. It’s widely assumed that if they don’t come up with a multinational, coordinated plan to restore liquidity to the banks, the wild gyrations and crashes of the past week will turn out to be just the warm-up act. Simon Bower of the Guardian sounded this ominous note yesterday: “Anxiety levels in the global financial markets were ratcheted up yesterday after credit derivatives linked to the failed US investment bank Lehman Brothers, with a face value estimated at $200bn (£118bn) to $440bn, began to be unwound.”
That would be credit default swaps, which are the ticking nuclear bomb in the middle of the financial crisis, the element that could turn a crash and recession into financial armageddon.
Last night there were reports that they were going to do what one member, the United Kingdom, had already done and basically nationalize the banks. I passed that tidbit along to the right wingers on Usenet, along with a cheery, “Comrades! We are all socialists now!” which failed to provoke any laughs.
But now the G7 is talking instead about governments buying up all the NON-voting stock on the banks, a course that would provide plenty of risk to the taxpayers whilst ensuring that there were no steps they could take to mitigate that risk. Control of the banks would remain in the hands of the experts who wrecked the banking system in the first place.
It’s a bit like coming across a bus crash, where passengers are scattered all about the place, injured and moaning, and the driver is sitting in the middle of the wreckage, dazed, smelling of booze, and unable to explain just how that tree jumped out in front of him.
What the G-7 wants to do is hire that same driver to ferry the injured to the hospital. And they’ll ride along as passengers.
They need to flat-out nationalize the banks, and restore liquidity, and they need to do it now. While they are at it, they need to call a moratorium on mortgage foreclosures (the Cook County Sheriff’s Department has already announced it would stop evicting tenants from foreclosed properties, an act of rebellion that I hope spreads), and they need to completely freeze trade on derivatives, and do it by Sunday night, when the European markets open. The US will be shielded from the carnage for an extra 36 hours, because of Columbus Day.
Just a few months ago, even suggesting that the banks ought to be nationalized would get you loudly dismissed as a socialist by plutocrats unwilling to take the biggest key to their power and hand it over to the government. Not only was it not on the political radar, but it wasn’t even about to get air-borne.
I know a lot of people on both the left and right who will tell you that the biggest mistake America ever made was establishing the Federal Reserve. This, in effect, ensured that the nation’s money supply was privatized, which meant that a shadow authority born of sheer economic power could spring up and vie with the government for control of the country. Clear back in 1802, Thomas Jefferson foresaw the danger, and wrote Secretary of the Treasury Albert Gallatin, declaring, “I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”
Of course, back then, the economy was a tiny little thing, as befitted an agrarian nation of some 5.5 million people, nearly all of whom lived in the country. Jefferson envisioned a land where farmers could stamp their own bullion and use it in trade. Obviously, with bullion reserves making for far less than a 1% margin, he would probably have to devise some other process.
But if he came to 2008 America and familiarized himself with the present crisis, he probably would. He would have little trouble recognizing the source of the crisis, and would have a remedy similar to what he wanted over 200 years ago.
Jefferson was far less worried about where the money came from than he was about where the power accrued. His objection to private banks rested, not on some fervent desire for nationalization – the man was hardly a Marxist, after all – but because he didn’t want to see massive power accrue in the hands of a banking class, as had happened in Europe since the end of the medieval age.
Jefferson felt that the greatest threat to freedom was the rise of an aristocratic class in America. To that end, he not only proposed that the power to make money should reside in the hands of the people, but that all real estate be recycled back to the government for redistribution upon the deaths of the owner.
He was right: we have seen the rise of a monied class that has twisted and perverted America, and now we have one of those once-in-a-lifetime events where its own greed, stupidity, and wretched excess have brought it down. It happened in the 1930s, and around 1880. It was inevitable that it would happen again.
Nationalizing the banks may or may not short-circuit the crash. Certainly it has a better chance of it than any of the other measures thus proposed. And with a new administration coming, people have an unparalleled opportunity to take the monied class and bring them down to size. Yes, they serve an important role in a capitalist society, or any society which permits private enterprise. But they are not worth giving 90% of the national wealth to for them to squander, and that’s exactly what has happened. The people can change that, bloodlessly and effectively, and in manners fair to the monied class but which restore power to the people.
One minor oddity is the behavior of George W. If you ever need an example of a worthless third-generation whelp given undeserved power and position by nothing more than his family name, he is that example. Never more than a bit player in this whole mess since it blew up several weeks ago, and more of a joke by this point, he’s been running around telling his aides that America’s just lucky that he’s the one in charge. I mention that just in case there is anyone out there who still thinks George has any connection to reality any more. But he has the sense of entitlement that is the hallmark of his class.
It is time to put them back in their place, and return America to the people.
Comments
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Zepp–
for the most part, I agree with you. I am writing, however, to offer some friendly criticism of what you wrote. Your article makes several references to how Jefferson thought, and I imagine that he might’ve thought that way. But I don’t know because I wasn’t there and you don’t know because you weren’t there either.
One particular comment of yours struck me — your assertion that Jefferson was no Marxist. Of course he was not! Jefferson died in 1826 according to Wikipedia, when Marx was only eight years old, having been born in 1818, again according to Wikipedia (and my copy of Marx-Engels “Selected Works”)–and it took him a while to think his way past Hegel to think up historical materialism.
I’m not arguing for serious scholarship here. Mainly I’m interested in not weakening our arguments against the right wing’s neo-know nothing approach to political discourse.
Please keep writing…
Bob