What hath Bush wrought? The nationalization by the US of American International Group is a complete repudiation of the free market capitalist philosophy that both parties have championed for decades. Today's NYT [9-18-08] says that European capitalists are shocked by the US's apparent "abandonment of capitalist principles." The US has preached a doctrine of antigovernment intervention in free markets to others for decades but its own actions have "probably undercut future American actions to promote such policies abroad."
Ron Chernow, an important historian of finances, is quoted as saying, "I fear the government has passed the point of no return. We have the irony of a free-market administration doing things that the most liberal Democratic administration would never have been doing in its wildest dreams." Talk about Change! Talk about being a Maverick!
While Ayn Randists and free marketeers around the world are in deep mourning over Uncle Sam's defection towards anti-capitalist economic nationalism others are rejoicing at the fall of the last bulwark of laissez faire. Mario Monti, recently of the European Commission, stated: "For opponents of free markets in Europe and elsewhere, this is a wonderful opportunity to invoke the American example. They will say that even the standard-bearer of the market economy, the United States, negates its fundamental principles in its behavior."
The NYT also quotes Monti as saying while other capitalist states have had to negate the free market due to crises [in Russia, Mexico and some Asian countries-- it seems the "free" market doesn't work all that well]--"[T]his is the first time it's in the heart of capitalism, which is enormously more damaging in terms of the credibility of the market economy." This will certainly encourage the Chinese to strengthen the CPC's control and direction of their "socialist market economy."
Sarkozy's allies in France are hailing Bush's actions as "economic patriotism." A nation's government should jump into the "free" market to support its own when they get into trouble. Bernard Carayon, a French Sarkozyite enthused, saying of the Bushites: "I congratulate them." He added, this is "an era where we have much more regulation and where the public and the private sector will mix much more."
What this really means is that raw, naked monopoly capitalism will have to reveal itself more and more as the myth of the "free" market dies the death of the thousand cuts. Parasitic capitalism's inability to function without continual state intervention, in one form or another (nationalization, loans, tax cuts, credits, etc,), can never be covered up again.
Gary Gensler (who was at the Treasury Department under Clinton) is reported by the NYT as saying: "This is a paradigm shift." What the US did was nationalize a company that was gambling on the market (with derivatives and hedge funds) and lost. The US stepped in to save the investor's cookies-- that is state monopoly capitalism so Bush is no enemy of capitalism. But he is a hypocrite with regard to free markets and competition.
Finally, Ron Chernow is quoted in closing: "It's pure crisis management [the general crisis of capitalism is back with a vengeance]. It's the Treasury and the Federal Reserve lurching from crisis to crisis without a clear statement on how financial failures will be handled in the future. They're afraid to articulate such a policy. [That's because crises are inevitable under capitalism-- they can be postponed and put off for a time, but they return to get you just like Freddie (Mac)]. The safety net they are spreading seems to widen every day with no end in sight." Maybe that end will be the final conflict.