Western Standard

The Shotgun Blog

« So what do Jean and Pauline think about their cousins getting married? | Main | It would appear I am doomed to be disappointed »

Friday, November 28, 2008

Conservatives seek power to nationalize financial institutions, you know, just in case

I shudder when I encounter an article that says the government is "setting aside free-market ideological principles and internal party resistance, taking what they view as a pragmatic approach."

Eek!

Yup, the Conservative Party of Canada, following the example of their Republican brethren to the South, are attempting to give the CDIC the ability to take over failing lending institutions.

The Financial Post reports:

"The Conservative government Friday sought the power to take stakes in the country's banks and to seize control of troubled financial institutions, in the most radical and far-reaching response yet to the crisis in the global financial system.

The new authority would allow the government to inject capital into private institutions or to take over a failing lender and split it into a "good bank" and "bad bank."

The radical measures would empower Ottawa to follow the example of Washington and London and other western capitals that have bought shares in banks and gained influence over their affairs.

The steps are "in keeping with the action plans we agreed to with our international counterparts at the G7 and G20 meetings," Jim Flaherty, the Minister of Finance, said Friday in his autumn economic statement.

[...] The legislation will also give new powers to the Canada Deposit Insurance Corporation to follow the example of its U.S. counterpart and seize and operate distressed lenders.

This would allow the federal agency to split up an institution into a "good bank" and "bad bank", hiving off crippling debts and continuing to make loans and operate the company until it can be wound down or sold." (emphasis mine)

But not to worry, they reassure us, it's not like the government is actually planning to *use* their new powers. Outright nationalization of the financial industry will be just another tool at their disposal:

"While government officials do not anticipate using the new powers, they feared being caught with their hands tied if the credit crisis continued to drain capital from the country's banking system and intervention was required to save a bank or insurer."

What a relief! I sure am glad governments never take advantage of crises to seize massive new powers.

Posted by Kalim Kassam on November 28, 2008 in Economic freedom | Permalink

TrackBack

TrackBack URL for this entry:
https://www.typepad.com/services/trackback/6a00d834515b5d69e201053620eb3c970b

Listed below are links to weblogs that reference Conservatives seek power to nationalize financial institutions, you know, just in case:

Comments

There's a manual on how the government can effectively go about taking over businesses and financial institutions. It was written by Mussolini, or was it Hitler?

Posted by: JC | 2008-11-28 1:00:28 PM


Good for you. Call them out for what they are – the power elite, bent on expanding their power.

http://www.mikevine.com/

Posted by: Mike Vine | 2008-11-28 1:03:03 PM


But not to worry, they reassure us, it's not like the government is actually planning to *use* their new powers. Outright nationalization of the financial industry will be just another tool at their disposal:
Posted by Kalim Kassam on November 28, 2008

The last Canadian Bank that failed was the Northland Bank in 1985. Where was it located? No surprise there, it was Calgary.

Posted by: The Stig | 2008-11-28 1:23:23 PM


The last Canadian Bank that failed was the Northland Bank in 1985. Where was it located? No surprise there, it was Calgary.

Posted by: The Stig | 28-Nov-08 1:23:23 PM


Curious, how is that pertinent to government intervention?
And why does a bank failure in "Calgary" come as no surprise?

Just trying to understand what it is you are trying to say.

Posted by: JC | 2008-11-28 1:35:23 PM


Curious, how is that pertinent to government intervention?
Posted by: JC | 28-Nov-08 1:35:23 PM

Without government intervention there has been one bank failure in almost 25 years. The previous failure was The Home Bank in 1923. The Canadian banks are solid.

And why does a bank failure in "Calgary" come as no surprise?
Posted by: JC | 28-Nov-08 1:35:23 PM

The conditions that were largely responsible for the failure of the Northland Bank were collapsing oil prices after a large run up in prices, similar to what we are seeing today. Northland Bank bet on oil and lost.

Posted by: The Stig | 2008-11-28 1:48:16 PM


Stig,
The impression I get is that you also see no reason for government intervention as the only bank to fail did so by irresponsibly betting on oil. (a volitile commodity)
Is that a fair impression?

Posted by: JC | 2008-11-28 2:14:17 PM


The impression I get is that you also see no reason for government intervention as the only bank to fail did so by irresponsibly betting on oil. (a volitile commodity)
Is that a fair impression?
Posted by: JC | 28-Nov-08 2:14:17 PM

The banks are solid. They have no liquidity problems. They are well run. There is little or no chance of a bank failure. And no I wouldn't bail them out.

Posted by: The Stig | 2008-11-28 3:52:39 PM


The banks are not solid. NP had an ariticle indicating for instance that TD had 125 billion in credit swaps - the new euphenism for DERIVATIVES.

In any case, why does Harper seem intent on copying failed Keynsian ideology of the Bush Administration? If he nationalizes the banks on the taxpayer dime that will be it for me and the CPC. I don't vote for brown shirts.

Posted by: Faramir | 2008-11-28 4:23:08 PM


The banks are not solid. NP had an ariticle indicating for instance that TD had 125 billion in credit swaps - the new euphenism for DERIVATIVES.
Posted by: Faramir | 28-Nov-08 4:23:08 PM

It's $2.5 billion not 125 billion, of which credit swaps are only part of it.

Posted by: The Stig | 2008-11-28 5:54:47 PM


Money can be made trading this awesome volatility. But the idea of bailing out poorly run companies in a Socialistic way is perverse. America is all about Free Enterprise and Capitalism. What happened to survival of the fittest?? Let the companies fail, what will be built up out of the remains will be true and strong

Posted by: Seamless | 2008-11-28 8:45:47 PM


Money can be made trading this awesome volatility. But the idea of bailing out poorly run companies in a Socialistic way is perverse. America is all about Free Enterprise and Capitalism. What happened to survival of the fittest?? Let the companies fail, what will be built up out of the remains will be true and strong

Posted by: Seamless | 28-Nov-08 8:45:47 PM

Where is this idea that these bailouts are "socialism" coming from? It's not. I know you all love to hate anything that doesn't appear to be conservative, but jeez, at least get your hate terminology right.

It is an ism, but not Socialism, try Corportism or if you want to go all the way call it Fascism.

Posted by: Snowrunner | 2008-11-28 9:40:26 PM


Snowrunner,

Socialism is often understood in a very narrow sense, but the bailouts are corporatist, fascist and socialist.

Just as corporatism is the economic system of fascism, both corporatism and fascism are forms of socialism. At least that's the way Benito understood it...

Posted by: Kalim Kassam | 2008-11-28 9:46:17 PM


Just as corporatism is the economic system of fascism, both corporatism and fascism are forms of socialism. At least that's the way Benito understood it...

Posted by: Kalim Kassam | 28-Nov-08 9:46:17 PM

Sure, the "system" is the same (take money from the taxpayer and give it to "individuals"), but the concept behind it, much less the repercussions behind it are different.

What is currently happening has really nothing at all to do with Socialism. There is no benefit for the individual at all as the money being thrown at these companies ends up in a black hole, never benefitting any of these workers.

It's just funny how the posters on here get their knickers in a bundle over the joy that his Highness Harper is about to safe 30 Million by stopping the 1.95 "Democracy Charge", yet nobody seems to scream at him for the 75 billion he has given the banks for their "assets", nor does anybody actually question the "we are running a surplus", just a cursory look at the money spent vs. the money earned over the last 12 months under Harper's and Flaherty's watch should have made it utterly clear to most people we are already in a deficit situation.

I have ZERO problems with a deficit in these times if it is used towards the people (call it Socialism) but I am utterly opposed to the Corporatism that seems to be cheered on here in a large part (I avoid the Facism discussion, but Harpers behaviour shows a few signs as well).

I will keep my fingers crossed over the weekend that they actually can get a coaltion together and kick his (and Flaherty's) sorry ass out. I cannot see any of the other parties do a worse job then the CCPC right now.

Posted by: Snowrunner | 2008-11-28 10:02:40 PM


"Sure, the "system" is the same (take money from the taxpayer and give it to "individuals"), but the concept behind it, much less the repercussions behind it are different.

What is currently happening has really nothing at all to do with Socialism. There is no benefit for the individual at all as the money being thrown at these companies ends up in a black hole, never benefitting any of these workers."
Posted by: Snowrunner | 28-Nov-08 10:02:40 PM

You're right and wrong Snowy. Justin Raimondo calls this form of socialism without the egalitarianism or concern for workers "plutocratic socialism," or "socialism for the rich" in his essay "The Resurrection of the Socialist Idea":

"What is completely different, however, about this incarnation of the socialist idea is that it has taken on a new and quite unusual form, one that at first appears so counterintuitive as to be virtually impossible—one that seems to negate the very essence of the socialist ideal, which is—or has been—egalitarianism. Everyone will be made more equal: all will be responsible for all. None will go hungry, and production for use and not for profit is the rule law and morality. That ideology, however, seems to have died along with the old Soviet Union, never to rise again. In its place, however, the mutant offspring of Western materialism and social democracy is arising to take its place, which can only be described as plutocratic socialism.

As a political program, socialism for the rich, and capitalism for the middle class would seem to have a strictly limited appeal. This, however, belies the power of fear, and of the catastrophism that has overtaken our thought processes in the course of the economic meltdown. We were told that unless Congress immediately coughed up $700 billion, pronto, the sky would fall, the economy would collapse, and we’d be in for America’s Second Great Depression. Oh, but don’t worry, because we’re going to use the money to buy shares in the banks, and the taxpayers will get their money back – with interest. Think of it as a gigantic financial toxic spill, which can only be cleaned up by government action: We’re going to buy up those bad ol’ “toxic” loans and make them “green” and profitable again. And they all lived happily ever after.

Except that it didn’t work out that way, and the disillusion came in record time. A few weeks later the story switched: Oh, never mind, they said. We aren’t going to buy shares, no one’s getting any money back, we’re just going to give the banks lots of cash and hope they don’t fail – oh, and, this is just the beginning. The auto industry is next: We’re going to let them declare themselves banks, which they practically are as far as the unions are concerned. Except their account is overdrawn, the money spigot is run dry, and so it’s up to the government to guarantee their wages, their standard of living, and the perks and privileges they have retained against all economic pressure and common sense.

This is a socialist revolution from the top down, a revolution led by the bankers, who were the first to throw off their chains and declare they had a world to win. Liberated from the tyranny of the system of profits and losses, and refusing to let their surplus labor be exploited any longer, they rose up, and, as one, seized control of the machinery of government, or specifically the U.S. Treasury, which they proceeded to loot to their heart’s desire. They did this in the midst of a presidential election, with both “major” party candidates signing on to this singular act of grand larceny, and to the loud hosannas of the punditariat. The vanguard party of this socialist revolution wasn’t some Marxist-Leninist outfit, but Goldman Sachs, whose former CEO, Treasury Secretary “Hank” Paulson, handed over some ten billion in bailout money to his corporate alma mater. Along with a brace of Wall Street firms deemed “too big to fail”—including Bear Stearns, AIG, and the country’s major banks—the Money Power secured its interests, even as the financial house of cards they had spent the last decade or so building collapsed around them. The common folks would be dragged under, but the golden parachutes of the ruling elites unfolded without a hitch. Here was a great revolutionary upsurge whose slogans were “Save the rich!” and “Billionaires first!” "

http://www.takimag.com/site/article/the_resuscitation_of_the_socialist_idea/

Posted by: Kalim Kassam | 2008-11-30 3:25:03 AM



The comments to this entry are closed.