Or a Marshall Plan for American finance capital?
It seems that the Bush administration prefers the corporate Marshall Plan option even though Bush believes governmental intervention into the economy to be necessary given the magnitude and significance of the crisis. Yesterday Fed Chairman Ben Bernanke and Secretary of the Treasury Paulson addressed Congress and proposed a new stabilization plan to save finance capital from the judgment day it had created for itself, a plan which conspicuously lacks an economic stimulus package, according to the New York Times. The plan goal is made clear: It is to restore "…the strength of our financial system so it can again finance economic growth." The plan means to achieve this end by removing the "…illiquid assets that are weighing down our financial institutions and threatening our economy." Although the plan lacks a stimulus program, a reindustrialization program (manufacturing still does not matter), relief for threatened mortgage holders or even a federal criminal investigation into the practices and parties which produced this catastrophe, Paulson denied the intent of the Administration's plan was the rescue Wall Street.
Mike Whitney does not agree with Paulson's defensive claim. He also finds it ironic that "…the very people who created this mess…are the ones who will decide how to resolve it…." He then asks a relevant question: "Where else but Washington would such massive failure be rewarded with more power and authority?"
Nor does William Greider, who argues that:
Financial-market wise guys, who had been seized with fear, are suddenly drunk with hope. They are rallying explosively because they think they have successfully stampeded Washington into accepting the Wall Street Journal solution to the crisis: dump it all on the taxpayers. That is the meaning of the massive bailout Treasury Secretary Henry Paulson has shopped around Congress. It would relieve the major banks and investment firms of their mountainous rotten assets and make the public swallow their losses — many hundreds of billions, maybe much more. What's not to like if you are a financial titan threatened with extinction?
He then states:
The scandal is not that government is acting. The scandal is that government is not acting forcefully enough — using its ultimate emergency powers to take full control of the financial system and impose order on banks, firms and markets. Stop the music, so to speak, instead of allowing individual financiers and traders to take opportunistic moves to save themselves at the expense of the system.
It is becoming clearer every day that Bernanke, Paulson, the Bush administration and the Republican Party as a whole are betting that they and Wall Street actually can fool most of the people nearly all of the time. The story has yet to conclude, though. Americans will soon learn that the effects produced by this crisis will easily dwarf those attributed to 9.11 and the GWOT. What will happen then?
Pam Martens chimes in with her assessment of the planned bailout:
There is no sincere plan by this administration to help America or Americans. There is only a plan to slow the financial collapse until after the November elections by throwing a politically palatable amount of money at it and a plan to continue to blame it on a housing bust.
If we, the American people, allow this to happen, we're enablers to the unintelligent design model. Before one more penny of our taxes are spent on this ruse, we must demand a seat at the table (I think Ralph Nader should occupy that seat) to discuss breaking up Wall Street, crushing this model, innovating a sensible model that serves the individual investor and deserving businesses, and promises our children a future of more than a banana republic.
Mike Whitney's most recent (9.21.2008) assessment of the Paulson plan:
The Paulson strategy is to create another ocean of red ink while refusing to face the underlying problem head-on. This just further exacerbates the consumer-led recession which economists know is already setting in everywhere across the country. Demand is down and consumer spending is off due to falling home equity, job losses, and tighter lending standards at the banks. The broader economy does not need the added downward pressure from higher taxes, bigger deficits, or inflation. Paulson's plan is a band-aid approach to a sucking chest wound. The debts are enormous and the pain will be substantial, but the problem cannot be resolved by crushing the middle class or destroying the currency.
The hidden dilemma posed by the plan is not whether it will work in some way which improves the common good but whether it is meant to work in a manner most Americans would consider acceptable. Why believe the former to be true when the plan appears to be little more than a massive transfer of wealth to America's finance capital? We should not believe it true given the present situation and the historical record. In their analysis of the 1970s crisis, Duménil and Lévy (2004) tell us that
The shift to neoliberalism [in the 1970s] had two types of consequences. First of all, finance managed the crisis according to its own interests, which prolonged the crisis; second, this stretching out of the crisis made it possible for finance to shift the course of history in its own interests. Both elements, the management of the crisis and the setting up an alternative society, are indeed linked — the crisis created the conditions for destroying the old order [p.16].
One could add to Duménil and Lévy's point that the crisis also provided the elements needed to create and legitimate the neoliberal order which 'resolved' the crisis. It is this neoliberal system which has recently faltered and which the plan seeks to defend.