“Why man, they did make love to this employment.” So says Hamlet to Horatio as he describes how he foiled the king’s plot to assassinate him, instead sending Rosencranz and Guildenstern to their deaths (Hamlet, V, ii, ln 55). It seems like the U.S. government is on the verge of nationalizing the two largest banks in the world. But who is being saved and who “goes to it?”
In the early 1990s, Sweden successfully nationalized two banks, wiping out shareholder positions, but at the same time guaranteeing investors who extended loans to Swedish banks. According to the head of the Swedish National Debt Office, Bo Lundgren, this allowed banks to continue to do business while giving the government several years to sort them out and re-privatize them. Mr. Lundgren will be in Washington this week to advise Congress. Let’s hope they listen.
According to The Local – Sweden’s News in English, “…Washington’s rescue package appears to favour stock holders without much prospect of the tax payer-spent money ever being reimbursed. ‘What’s happening in the United States now entails a big risk that stock holders will win. If the banks survive, the stock holders’ holdings will still be there but the tax payers will have to foot the bill,’” Lungren is quoted as saying.
The U.S. approach seems not unlike the kind of Ponzi scheme that would have Bernie Madoff smiling quietly to himself. Money is taken from the taxpayers to payoff the shareholders. Or perhaps it is like the former UBS banker who testified to helping a client smuggle money out of the U.S. by stuffing diamonds into a tube of toothpaste?
Or even like today’s report that our government continues to bail out AIG so that it can pay lavish bonuses. The Sacramento Bee quotes Obama’s top economic adviser as saying “the easy thing would be to just say … off with their [AIG] heads, violate the contracts. But you have to think about the consequences of breaking contracts for the overall system of law, for the overall financial system.” This shows a remarkable lack of imagination on the part of the Obama administration. The easier thing to do is to not provide AIG with additional taxpayer funds. It would be hard for those economic terrorists at AIG to collect their bonuses wouldn’t it?
My advice to Obama is simple – yes you can!
On the matter of “economic terrorism,” the Oxford English Dictionary defines a terrorist as “a person who uses and favors violent and intimidating methods of coercing a government or community,” and also as “a person who tries to awaken or spread a feeling of fear or alarm.”
Plato’s Republic was mentioned in a prior blog. One of Plato’s positions was that morality is beneficial to its possessor. Using metaphor and allegory, Plato constructs an imaginary community for the purpose of understanding individual psychology. In this sense, he did not really believe that “the Republic” was actually attainable. According to author Robin Waterfield, “Plato…saw democracies enact sensible laws, but he knew the system was capable of terrible abuse.”