Capitalism, Socialism or Fascism?
by ilene - October 25th, 2009 4:43 pm
Washington argues that when metastatic cancer takes over the body, identifying the type of cancer is more of an interesting dinner party conversation than a cure (metaphorically) – Ilene
Capitalism, Socialism or Fascism?
Courtesy of Washington’s Blog
What is the current American economy: capitalism, socialism or fascism?
Socialism
Initially, it is important to note that it is not just people on the streets who are calling the Bush and Obama administration’s approach to the economic crisis "socialism". Economists and financial experts say the same thing.
For example, Nouriel Roubini writes in a recent essay:
This is a crisis of solvency, not just liquidity, but true deleveraging has not begun yet because the losses of financial institutions have been socialised and put on government balance sheets. This limits the ability of banks to lend, households to spend and companies to invest…
The releveraging of the public sector through its build-up of large fiscal deficits risks crowding out a recovery in private sector spending.
Roubini has previously written:
We’re essentially continuing a system where profits are privatized and…losses socialized.
Nassim Nicholas Taleb says the same thing:
After finishing The Black Swan, I realized there was a cancer. The cancer was a huge buildup of risk-taking based on the lack of understanding of reality. The second problem is the hidden risk with new financial products. And the third is the interdependence among financial institutions.
[Interviewer]: But aren’t those the very problems we’re supposed to be fixing?
NT: They’re all still here. Today we still have the same amount of debt, but it belongs to governments. Normally debt would get destroyed and turn to air. Debt is a mistake between lender and borrower, and both should suffer. But the government is socializing all these losses by transforming them into liabilities for your children and grandchildren and great-grandchildren. What is the effect? The doctor has shown up and relieved the patient’s symptoms – and transformed the tumour into a metastatic tumour. We still have the same disease. We still have too much debt, too many big banks, too much state sponsorship of risk-taking. And now we have six million more Americans who are unemployed – a lot more than that if you count hidden unemployment.
[Interviewer]: Are you saying the U.S. shouldn’t have done all those
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW.