By Dave Lindorff

After watching the markets plunge and the credit freeze become
glacial, Treasury Secretary Henry Paulson backed away from his scheme
to rescue his investment banking colleagues by spending hundreds of
billions of dollars buying up worthless credit derivatives. His new
strategy: follow Britain’s lead and invest that same money--$250
billion for starters—into the banks as equity—specifically into the
shares of nine of the country’s largest banks.

This might sound a little like socialism—the kind of mandatory
nationalization that the US has devoted decades, and tens of billions
of secret dollars to trying to undermine and attack when practiced by
leaders in countries like Venezuela, Cuba, Chile or post-war Italy. But
Paulson’s no red.

To avoid this government investment in the US banking industry
being labeled “socialist,” Paulson and his fellow conspirator, Fed
Chairman Ben Barnanke, are only buying non-voting shares of
the banks. Get it? They’re giving hundreds of billions of our dollars
to bankers in the form of ownership shares of these companies, but they
aren’t asking for any say in the banks’ policies in return.

The rescued banks will be able to write trillions of dollars of
loans against the new capital being injected into them courtesy of the
American public, but they won’t have to lend any of it to us. They
could, and most likely will, lend it to foreigners, or to anyone
offering a higher interest rate on the money. They could pay it out in
the form of bigger bonuses for executives. They could use it to buy up
smaller competitors who aren’t getting a piece of the federal bailout.
My guess is they’ll do all three.

The thing is, they can do whatever they damned please, because
Uncle Sam is not asking for votes on the banks’ boards of directors in
return for all that invested cash.

Why not?

Well, that would be socialism, right? It would amount to public
ownership of the means of loan production. And we all know where that
would lead: to decisions by bankers that might actually benefit the
common good.

And we cannot have that! That’s not what America is about. America
is about rugged capitalism, where hard-nosed executives make decisions
based upon a rigorous cost-benefit analysis that magically ends up
putting capital to its most productive use. That’s why we in America
have, um, well, that’s why we have car companies that only produce
giant, gas-guzzling SUV’s, muscle cars and trucks, cities that are
entirely composed of hotels and casinos, houses that are big enough to
hold four families, collapsing transit systems, failing schools, and a
hollowed-out economy that hardly produces anything the rest of the
world wants to buy.

Hmmmm. Maybe those free-market capitalists aren’t so good at making
investment decisions after all—at least where the good of America and
the American people are concerned.

I’m not saying that politicians would necessarily do a better job,
but judging by the latest turn of events, which is to say the
near-death experience for the global economy, I’d say that they could
hardly do a worse job than the capitalist class has done. And
maybe, if we could get our democratic system up and running again, with
citizen/voters taking an active interest in what the political class is
doing, maybe we the People could compel our politicians make some
investment decisions for those banks that would be in our actual
interest.

Maybe if we demanded that for our hard-earned money, we the People
got voting rights on the banks’ boards of directors, we could see to it
that those banks invested in the public good. Maybe we could get them
to make loans for housing projects that made sense—for example near
public transit, or for renovating housing in urban centers. Maybe we
could get boards to agree to break up their banks so that they’d be
more responsive to local needs, instead of always voting for
acquisitions that have made banks bigger and less responsive. Maybe we
could vote out the empire building executives, and replace them with
more civic-minded folks who wanted to make their banks engines for
local development.

But that sounds like those dreaded Euro-Socialists. The ones who’ve run their countries into the ground, you say?

Um. Have you been to Europe lately? Europeans are by most standards
living better than we are. They don’t fret about health care, they have
secure jobs, and if they lose a job, the state takes care of them, so
they don’t have to worry about being put out on the street. Their cars
are smaller than ours, but then, they don’t need to use them to get to
work because they have excellent public transit systems, so they can
get along fine with one, instead of two or three vehicles to a family.
Oh, they get real vacations too, where they get to leave for a few
weeks and have real down time with the family. Imagine that!

At this point, we don’t even know if Paulson’s latest
boondoggle—throwing a quarter of a trillion dollars at a handful of
humongous banks that are bigger than any bank should ever have been
allowed to get—will work at unclogging the backed-up sewer that is the
American financial system. Maybe before he blows too much of that
money, we should demand that Congress stay his hand and say that for
such equity stakes, he should be getting voting shares, putting
public-minded members on those banks’ boards, and attaching rigorous
strings to what can be done with our money.

Nationalization lite isn’t going to accomplish anything except to waste
more of our money while enriching the same people who got us into this
mess in the first place.

If we’re going to have social ownership of the banks, then let’s demand social control of them too!

~~~~~~~~~~~~~~~~~

Flash: Photo Proves Obama Consorts with Marxists!

A blog called Gateway Pundit
is breathlessly claiming to have "discovered" photo evidence of Obama's
secret Marxist background. The document, a photo showing a young
legislative candidate Obama and four other Chicago local candidates for
office endorsed by the Chicago New Party is headlined: "Great... We're
two shakes of a lamb's tail from having a former(?) Marxist as
president."

Only problem is, the New Party was an affiliate of the Democratic
Socialists of America, probably the most mildly socialist and clearly
non-Marxist of left parties in the US. Founded by a group of
anti-Communist leftists associated with former Socialist Party leader
Michael Harrington, the DSA, originally known as the Democratic
Socialist Organizing Committee, modelled itself on the social
democratic parties of Western Europe, notably the German Social
Democratic Party of Prime Minister Willi Brandt and the British Labour
Party.

So tame are the DSA's policies, which included actively supporting
all Democratic presidential candidates, that it was hard to tell if the
organization was socialist at all. Indeed, when the DSA hosted an
international meeting of the leaders of the Second International in
Washington shortly after the election of Ronald Reagan, it appeared
that leaders who attended, like Spanish Socialist Party leader Filippe
Gonzalez, German SDP leader Brandt and certainly British Labourite Tony
Benn were far to the left of most of the DSA members present.

If that's the best Obama's right-wing critics can come up with (and
they don't have him even as a New Party member, just as an endorsed
candidate of the New Party), they have a lot more work to do to show
he's a closet socialist, much less a closet "Marxist."

By the way, how is it that the right is claiming Obama is a Marxist and
a Muslim jihadi? Have they checked out what the Muslim governments have
done and are doing to the Marxists in their midsts? It's probably
easier to survive as a Christian or an apostate in Iran, Egypt,
Pakistan or Iraq than as a Marxist.

______________
DAVE LINDORFF is a Philadelphia-based journalist and columnist. His
latest book is "The Case for Impeachment" (St. Martin's Press, 2006 and
now available in paperback edition). His work is available at www.thiscantbehappening.net