Is America Now More Socialist than France

[Mackie]

Monday, 8 Sep 2008
Is America Now More Socialist than France?
Topics:France | North America | Politics & Government | Debt | Mortgages | Stock Market | Investment Strategy | Credit
Sectors:Financial Services
Companies:Freddie Mac | Fannie Mae

"The US government takeover of the GSEs......makes the US the most socialist system in the world, outside of places like North Korea and Cuba. It will have 75% of its current housing finance and the majority of its remaining capital allocation being financed with credit that is directly and indirectly the result of government and Fed intervention," according to Independent Strategy.

Thanks to our friends over at Independent Strategy for their provocative analysis this morning. The point has also not been lost on the French leader writers who (according to our Paris correspondent, Stephane Pedrazzi) noted in morning editions of La Tribune and Les Echos the irony of the situation.

US politicians have enjoyed pointing to the 'anti-capitalist' bailouts of Credit Lyonnais and most recently Alstom by the French government as signs of weakness; evidence of a morally corrupt political system that was unprepared to let businesses go through the natural process of failure and rebirth that strengthens liberal economies.

Let the French enjoy their moment. This GSE bailout is far from the market lead solution championed by the US. Individual borrowers who couldn't really afford their homes and institutions that dabbled in the underlying mortgage debt are being supported by the US taxpayer. Washington says the GSE's are too big to fail and that catch all justifies the intervention.

RELATED LINKS
US Is "More Communist than China": Jim Rogers
Fannie, Freddie: What It Means to You
Government Takes Control of Fannie, Freddie


History is being written on the hoof here, and hindsight will legitimize or otherwise the first reactions. Asset markets have decided that losses are being nationalized - and the risk appetite for equities has returned. We will have to see whether this rally can last more than a few days as investors ask what has really changed.

The GSEs apparently already enjoyed the government's lender of last resort guarantee. The market has tested the promise and Hank Paulson has shown the government is unwilling to abandon the eighty percent of the mortgage market represented. But the housing market and the balance sheets of the financials remain 'broken'. The Federal deficit is only set to grow as the GSE portfolio is managed before being shrunk.

Will this move increase home buyers access to credit? We do not know the answer yet. Will foreign investors become less confident about owning US assets? Unlikely. But the commitment the Treasury has now entered into appears open-ended, which can hardly make owners of US government debt happy.

The e-mail to the show this morning from all over the world (but especially America) was mostly angry. Angry that main street is going to bail out Wall Street. Angry that reckless borrowers may have their 'loans reclassified as solvent'.
And angry that government intervention presents the US in a weakened light.

The new US President will be under pressure to identify those to blame, and to tighten oversight of the banking system. Of course to argue the country is becoming more socialist as a result of this bailout is a little flippant. But there is a serious point to be made. American taxpayers deserve and will probably get greater financial regulation. The light touch has led to negligent lending practices and an excess of cheap money.

It might also be appropriate for American critics of French interventionism to bite their tongues - for the time being at least.

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It seems hard to understand for Mr Cutmore that capitalism doesn't work for the people and is only a nice working dog if you can tame him.

[afreu]

The take-overs are not a sign of socialism. The capitalistic idea is to privatise gains and to socialise losses.

[PanzerMaster]

US Government mistaken seriously letting free bunch of over-rich Robber Barons in doing what they did with the mortgage business.

Do you know that bunch of those mortgages where packed in obligations, rated AAA (that is, the maximum reliability of the debtor) and sold worldwide?

I mean,take 10 subprime mortgages for a value of 5 millions given to unreliable home buyers (that is the whole mean of "subprime").
Package them in a piece of paper and sold them as the most secure title in your portfolio with a rating that will equals or surpass those of the US and German government, and then sold away!!

Then come a bank, a government or a PENSION FUND that invest 5 millions dollars in those papers, believing that the triple-A rating will be a good and SECURE affair... instead they put their money in the hand of some ex trailer-park white trash junkie that has just bought his 600k mansion with his minimun wage job....

Good job American Robber Barons, you frauded the whole world, fvcked your own citizens and now Uncle "Corporate Puppy" Sam is saving your arses...

God Bless America, because nothing else remain to say.

[PanzerMaster]

The take-overs are not a sign of socialism. The capitalistic idea is to privatise gains and to socialise losses.

x2

This take over is the perfect example of the extreme-capitalism that is taking down the draining the American citizens... (the world's others will be following soon).

[Wall]

The capitalistic idea is to privatise gains and to socialise losses.
No it isnt. Dont troll.



This take over is the perfect example of the extreme-capitalism that is taking down
In extreme capitalism state does not involve in business.
So, this isnt capitalism when state nationalizes corporations.

What do you think, why there is text like:
"The US government takeover of the GSEs......makes the US the most socialist system in the world"

[PanzerMaster]

No it isnt. Dont troll.


In extreme capitalism state does not involve in business.
So, this isnt capitalism when state nationalizes corporations.


In extreme capitalism state is only a branch, a peripherical office, of a big corporation or cartel of corporations. And act on behalf of those corporations, protecting their interestes and making good their losses. p-)

When USA will act in defense of the common citizens (GOD how I hate say "common" regarding to people), prohibiting and limiting certain business practices... we can speak about steps in the direction of socialism (or social awareness, how I like to call it).

For now, USA gov (like Italy gov and many others) is only a puppet.

I repeat, bring back the true, angry, Uncle Sam and reread the farewell speech of Eisenhower.

[Wall]

In extreme capitalism state is only a branch, a peripherical office, of a big corporation or cartel of corporations.

So then it isnt capitalism. When goverment involves / regulates economy, it isnt capitalism. It is then mixed economy.
Again, why do you think there is text:
"The US government takeover of the GSEs......makes the US the most socialist system in the world"

[Mackie]

I don't believe in national controlled companies or institutions and I am very sceptical that the modern form of capitalism is like 50 years before.
Some things are major problems which transformed capitalism in a dangerous way.

1. Currencies, not backed by gold or other goods and fast, uncontrolled trading.

2. The rising lack of connections between local investors and companies. Example: Siemens Mobile and BenQ. Stealing technology a don't care about the common people/workforce.

3. Accepting Copyrights

...

I doubt Ron Paul simulated the full scenario of his economy politics.

[PanzerMaster]

So then it isnt capitalism. When goverment involves / regulates economy, it isnt capitalism. It is then mixed economy.
Again, why do you think there is text:
"The US government takeover of the GSEs......makes the US the most socialist system in the world"

I said that I don't see a government anymore in USA, just an executive office subordinate to corporations that is trying to save the arses of its owner/masters.

[Bitogno]

It is worsening, USA is now more communist than China : http://www.militaryphotos.net/forums/showthread.php?t=141766

[PanzerMaster]

It is worsening, USA is now more communist than China : http://www.militaryphotos.net/forums/showthread.php?t=141766

Holy Smokes! Things evolve quickly as we are talking!

What's next? "Saudi Arabia is now more chatolic than the Vatican!"?

[Wall]

I said that I don't see a government anymore in USA, just an executive office subordinate to corporations that is trying to save the arses of its owner/masters.
And that is negative thing. But it isnt "extreme-capitalism".

[Chimera]

Is Sweden leaning towards the "new Somalia of Europe"?

[PanzerMaster]

And that is negative thing. But it isnt "extreme-capitalism".

We can agree about lexicon then, no problem for me. The bad is that things are going badly for 90% of the population, 9% are getting by well and the other 1% (or less, or more) is getting obscenely rich.

At least, once, there was the scarecrow of communism and eastern block so the West made attempt to keep citizens happy... now we are again in the far west.


Is Sweden leaning towards the "new Somalia of Europe"?

Wat? You post from France? How things are going in the Casbah? LOL!

[Mackie]

So then it isnt capitalism. When goverment involves / regulates economy, it isnt capitalism. It is then mixed economy.


We called it officialy "Social market economy".

[Mackie]

I said that I don't see a government anymore in USA, just an executive office subordinate to corporations that is trying to save the arses of its owner/masters.

Slavery is back. We know the consequences. p-)

[PanzerMaster]

Slavery is back. We know the consequences. p-)

Yes, wage slavery. Don't know about Germany, but here in Italy things are going down the draing, thanks to the emergence of a political class of neo-con mafiosos, US-style. :-(

[Mackie]

Still strong independent press and strong unions. But also strong lobby.
I see the italian problem in the high number of parties. They are to weak by oneself and coalitions ending in beef. We have problems with 5 of them. I always wondering how Italians handled the elections.

[Chimera]

I always wondering how Italians handled the elections.

They don't.

[PanzerMaster]

Still strong independent press and strong unions. But also strong lobby.
I see the italian problem in the high number of parties. They are to weak by oneself and coalitions ending in beef. We have problems with 5 of them. I always wondering how Italians handled the elections.

I cannot says, recently I, personally, tried to vote to limit damage choosing particular parties or the "lesser evil".

Do you know that here in italy exists a "Order" of Journalist, an invention of Mussolini? Every journalist must be registered and approved by this Order. Most of the press (not counting TV) is controlled by powerful economic interests.


They don't.

Yes, pretty much :)

[Mackie]

Do you know that here in italy exists a "Order" of Journalist, an invention of Mussolini? Every journalist must be registered and approved by this Order. Most of the press (not counting TV) is controlled by powerful economic interests.


Thanks. Doesn't know it was invented by mussolini but I know the problem about press.

[Chimera]

Do you know that here in italy exists a "Order" of Journalist, an invention of Mussolini? Every journalist must be registered and approved by this Order. Most of the press (not counting TV) is controlled by powerful economic interests.

The thing is in France, we have pretty much the same powerful economic actors involved in the media. For example:

-the Dassault Group (yes the one that manufactures the Rafale) owns a LOT of newspapers throught SocPresse, here is the list:
http://fr.wikipedia.org/wiki/Cartographie_des_marques_par_groupe#Dassault

-the Ladagrdère Group, owns also part of EADS capital and Lagardère Média...http://en.wikipedia.org/wiki/Lagard%C3%A8re_Active

So basically, 80% of our medias are controlled by firms that have economic interests with the government (through military contracts), so some articles that should be published are actually cencored by Arnaud Lagardere and Serge Dassault offices.

However, it doesn't prevent the other newspapers an private TVs from being very critical to them.

[Klatuu]

The take-overs are not a sign of socialism. The capitalistic idea is to privatise gains and to socialise losses.

Completely incorrect.

The only legitimate functions of government in capitalism are to police force and fraud. Anything beyond that is antagonistic to Capitalism.

Capitalism isn't really a "system", it's merely the phenomenon of what people do, economically, when not constrained by others. Because human beings are imperfect creatures who sometimes lie, cheat, and steal, that means, in practice, Capitalism requires the necessary evil of government to enforce The Law (http://bastiat.org/en/the_law.html).

[PanzerMaster]

The thing is in France, we have pretty much the same powerful economic actors involved in the media. For example:

-the Dassault Group (yes the one that manufactures the Rafale) owns a LOT of newspapers throught SocPresse, here is the list:
http://fr.wikipedia.org/wiki/Cartographie_des_marques_par_groupe#Dassault

-the Ladagrdère Group, owns also part of EADS capital and Lagardère Média...http://en.wikipedia.org/wiki/Lagard%C3%A8re_Active

So basically, 80% of our medias are controlled by firms that have economic interests with the government (through military contracts), so some articles that should be published are actually cencored by Arnaud Lagardere and Serge Dassault offices.

However, it doesn't prevent the other newspapers an private TVs from being very critical to them.

50% of our major TV medias are owned (illegally) by the richest person in Italy, that is also our first minister (thus controlling the remaining 40/50% major TV that are State TVs), our government give TENS of millions of euros as "paper reimboursement" to the printed media... effectively subjugating them to the will of the State (controlled by the richest man above) and obliging journalists to adhere to the "Order".

Confused? No problem, vast majority of Italians don't know and don't care neither... especially now that the soccer championship begin

[Steaks]

It just proves the 'Free Market' philosophy is only for others

[Mackie]

@Panzermaster

Read this and you know the evil in German media.
Powerful in gossip but with bad reputation in intellectual media.

http://en.wikipedia.org/wiki/Axel_Springer_AG

[lauris71]

The only legitimate functions of government in capitalism are to police force and fraud. Anything beyond that is antagonistic to Capitalism.
IMHO it is more complex. Capitalist society (economic system) has 2 basic requirements:
1. Almost unlimited economic freedom (i.e. no guilds, minimal customs, duties etc.)
2. Limited economic liability (i.e. corporations - the way to put your capital to work for you).
While (1) is associated with "small government", (2) is much more problematic. From one side it makes possible to pool resources and gives incentives to take risk - because the risk is ultimately limited by the amount of money involved. From the other side, it insulates the people who make decisions from the consequences of their decisions. Some mega-corporation can f*** up the whole country (or it's financial system) - but owners will at most lose their investment.
While the freedom to make business between private persons can be considered "god given right", the freedom to have limited liability entities most definitely is not and requires special laws. Thus the capitalist system by the very essence needs certain amount of government above the bare minimum (police and fraud prevention).
Still the pooling of money and risk taking are such important things, that governments usually preserve the limited responsibility, but instead try to control possible damage by inventing more and more regulations.

[Exige]

Going badly for 90%? Yeah right. America is the most prosperous nation in the world and you say 90% are having a rough time of it. Oh yeah, I forgot, the American dream. Gotta have that jacked up up truck, huge house filled with toys, and maxed out credit cards. Who cares about all the stuff we get so easily. Anyone can get those things... Healthcare, social aid, free money, etc, etc. The true measure of success is having a lot of crap.

The American public brought this upon themselves and want to point fingers of those who sold them the goods they demanded.

It's no one's responsibility to fix the problem besides the people that started the problem. Americans.

You reference the essence of corporate greed but make little note that AMERICANS fund corporate greed. How about this: Americans fund American corporate greed by being greedy.

The Americans that got themselves in these positions were STUPID. Now the economy is paying the price.

America has made it's wealth from business. So before you go out accusing all those who are prosperous (that alleged 10%) lets be clear that those poeple provided products or services that were in high demand. If there wasn't a demand for crappy loans then there wouldn't have been any. Still wrong though.

So sick of whiny Americans. We want wealth, toys, social aid, etc, etc... But when the Piper comes for the bill someone else is always to blame.

But who am I to say? It's probably just all Bush's fault. I'm sure Obama or Macain will fix everything. After all, America is looking for someone to bail them out.


I said that I don't see a government anymore in USA, just an executive office subordinate to corporations that is trying to save the arses of its owner/masters.

Do you want to quantify that? Are you referring to lobbying? What corporations are you talking about? Bribery is taken very seriously, especially with the executive branch.

Please... Do tell.


It seems hard to understand for Mr Cutmore that capitalism doesn't work for the people and is only a nice working dog if you can tame him.

Taming it is counter productive because then it's not capitalism. Capitalism requires people to be intelligent with their money. Apparently most people are to stupid to have the freedom that capitalism can give, that is where the government steps in. The only reason people need protecting is because they are to uneducated, lazy, or foolish, to protect themselves.

[Exige]

Removed...

[PanzerMaster]

Going badly for 90%? Yeah right. America is the most prosperous nation in the world


roflroflroflroflroflrofl

Yes, averaging the wealth of the billionaires with the 45 millions of americans without healthcare, the 2 millions of inmates and the mass of hard strugglin, honest working POORs

America is becoming a Medieval Nation: Nobles at the top and a mass of serfs at the bottom.
Many of the nobles actually realized that a mass of native serfs is troublesome, so they are replacing it with illegal aliens, AKA mexi chicos.




and you say 90% are having a rough time of it. Oh yeah, I forgot, the American dream. Gotta have that jacked up up truck, huge house filled with toys, and maxed out credit cards. Who cares about all the stuff we get so easily. Anyone can get those things... Healthcare, social aid, free money, etc, etc. The true measure of success is having a lot of crap.

The American public brought this upon themselves and want to point fingers of those who sold them the goods they demanded.

It's no one's responsibility to fix the problem besides the people that started the problem. Americans.

You reference the essence of corporate greed but make little note that AMERICANS fund corporate greed. How about this: Americans fund American corporate greed by being greedy.

The Americans that got themselves in these positions were STUPID. Now the economy is paying the price.

America has made it's wealth from business. So before you go out accusing all those who are prosperous (that alleged 10%) lets be clear that those poeple provided products or services that were in high demand. If there wasn't a demand for crappy loans then there wouldn't have been any. Still wrong though.

So sick of whiny Americans. We want wealth, toys, social aid, etc, etc... But when the Piper comes for the bill someone else is always to blame.

But who am I to say? It's probably just all Bush's fault. I'm sure Obama or Macain will fix everything. After all, America is looking for someone to bail them out.


Cannot understan if you agree or disagree on some of my point.



Do you want to quantify that? Are you referring to lobbying? What corporations are you talking about? Bribery is taken very seriously, especially with the executive branch.

Please... Do tell.
Yes lobbying, disappearing middle class, horde of illegals coming in (and yes, that is an advantage for business but not for native workers and no US gov will do anything to solve that), ginormous mortage crisis scandal, obscene system for awarding no-bid contracts, enforcement of private healthcare, private education, exploiting of minimung wage workers...
I see an ultra-capitalistic heaven for the HAVEs, and an hell for the HAVE NOT... Your governments are only puppets and deeply intermingled with corporate interests (like mine, in Italy).

Re-read the warning of Eisenhower...

[Wall]

I see an ultra-capitalistic heaven for the HAVEs, and an hell for the HAVE NOT... Your governments are only puppets and deeply intermingled with corporate interests (like mine, in Italy).

There isnt ultra-capitalism in USA, not in Italy also.
If goverment involves in business for example protectin corporations, country is not ultra-capitalistic.

[PanzerMaster]

There isnt ultra-capitalism in USA, not in Italy also.
If goverment involves in business for example protectin corporations, country is not ultra-capitalistic.

Hi Wall, how do you do? Happy to see that we are always on head-on colllision. p-)

You are saying that a government that protects corporations (better: save the arses of who made billions frauding the entire WORLD) is not ultra-capitalistic? Is the PINNACLE of ultracapitalism, where governments are substituted (not in the name) by mere subordinate offices that acts on behalf of a powerful Complex.

[Wall]

Hi Wall, how do you do? Happy to see that we are always on head-on colllision. p-)

Im just trying to say, that in capitalistic ideology state doesnt involve in business. I think that minarchism or anarcho-capitalism would be "ultra-capitalism".

[PanzerMaster]

Im just trying to say, that in capitalistic ideology state doesnt involve in business. I think that minarchism or anarcho-capitalism would be "ultra-capitalism".

And I agree FULLY on what you say, because I am say (exagerating of course, I hope history will correct me) that I do not call anymore the US government "State", just an executive office, subordinate to a complex of companies and interests.