Paul Krugman sounds almost Zizek-ian, rewriting a Soviet joke to describe the Obama team’s Wall-Street-friendly economic policies so far. Treasury Sec. Timothy Geithner has indicated that bank nationalization is not in the cards, which is disappointing to a lot of us. The whole bailout is, at first glance, pretty absurd. Private banks, who have played fast and loose with America’s investments, want money because they ran out.
Theoretically, this isn’t how capitalism is supposed to work. According to the theory, these banks will fail and new ones will pop up and they’ll learn their lessons. This is what some house Republicans wanted to do after they consulted the ghost of Ayn Rand. The problem with this solution is that these banks have gotten “too big to fail,” so our entire financial system would fail with them. So capitalist orthodoxy has failed, no matter what solution we come up with now. The question now becomes do you buy the alcoholic teenager a new car after he totaled the last one?
No. And the metaphor isn’t completed by saying the teenager is grounded and rides in your car. The teenager should go to jail, just like every single wall street criminal. Now someone else needs to drive. Instead we’re trading billions of dollars for … nothing. The people are effectively donating to the Wall Street Foundation for The Exploitation of Americans. We should be trading. We’ll take this worthless but vitally important bank off your hands in exchange for not purging you. Deal. Nationalization is the only real solution at this point to keep the banks afloat and the economy running. A bailout without nationalization constitutes two losses for the American people.