Another step in the wrong direction.

In a significant shift, White House and Treasury Department officials now say they can stretch what is left of the $700 billion financial bailout fund further than they had expected a few months ago, simply by converting the government’s existing loans to the nation’s 19 biggest banks into common stock.

Converting those loans to common shares would turn the federal aid into available capital for a bank — and give the government a large ownership stake in return.

While the option appears to be a quick and easy way to avoid a confrontation with Congressional leaders wary of putting more money into the banks, some critics would consider it a back door to nationalization, since the government could become the largest shareholder in several banks.

Another writer, whom I read last week and can’t find the link to, noted that you don’t have to have full-blown government ownership of businesses to have what amounts to socialism; you just have to own the financial system that all those businesses get their financing from.  Like I said before, if you don’t want to call it "socialism", fair enough, but please don’t call it "capitalism".

Filed under: DougEconomics & Taxes

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