No one will call it what it is but state socialism has become the only way forward for the US economy caught in the grip of a downward spiral in the world of finance capital. Late today the federal government announced it was pumping in 85 billion dollars to rescue AIG, the global insurance company cum hedge fund.
Of course if the US government were any good at socialism it would take over General Motors and convert its real productive assembly lines to produce electric cars and mass transit trains rather than let the overpaid executives who are running that company into the ground continue destroying the most productive assets we have in this country, America’s workers and its technology.
But, no this is the US government and a republican one run by the very same CEOs and investment bankers who invented this absurd economic rube goldberg machine, so their version of socialism is to buy up the companies that are worthless!
Of course, there is no sign the Democrats have any more courage than the Republicans. Obama teased McCain today for the latter’s idea of a 9/11 style Commission to investigate what went wrong. Actually, if that Commission had genuine subpoena power and the power to bring charges against those who engaged in malfeasance it might make sense.
But Obama is right that it seems like passing the buck. The problem is that Obama has no idea what to do either, since he does not want to alienate his hedge fund backers on Wall Street nor his friends here in Silicon Valley who are allergic to government intevention. In any case, this is most definitely NOT a question of market manipulation or lack of regulation.
The basic issue is not transparency, as Obama advisor Robert Reich blithely argued today. It is structural. It is a question of how we channel worker savings into productive and socially responsible economic activity. Wall Street no longer knows how to do that. Only new financial institutions, government established and democratically controlled by elected trustees, can find a way out of this morass.