The Bush Administration can’t find funds to help struggling homeowners, bail out the auto industry, or prop up credit starved small businesses. But can those guys ever find the money when one of the big banks needs it!
Evidently working over the weekend to help their banking buddies, the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp. jointly announced on Sunday that they would guarantee $306 billion of probably bad loans at Citigroup – and plow $20 billion more into the failing company. The excuse is that the collapse of such a huge financial institution would send the teetering U.S. (and world) economy hurtling into the abyss.
The consequences of letting the American auto industry die doesn’t phase the Bush gang, however. So what if three million Americans lose their jobs? So what if working Americans (and many Canadians, by the way) are plunged into poverty? Bush’s response is: Let them eat cake! It’s the bloated banking industry that must be saved at any cost. And yet, as far as I can see, the U.S. banking system is obsolete. Nothing will save it in the long run.
America’s money supply system is a public/private creature that defies logical explanation (see illustration at right). Canada long ago nationalized its Central Bank, and according to the World Economic Forum, Canada has the soundest banking system in the world. The United States was ranked No. 40. (Mark Carney the governor of the Bank of Canada, said in a BBC interview Saturday that the global financial crisis could have been avoided if other countries had a banking system “as sober and sensible” as Canada’s.)
It’s obviously time for the U.S. to get rid of the Central Bank and substitute a financial system that works. To those who might say a government takeover of the banking system would be “Socialist,” my response is that the U.S. is already partly Socialist, and becoming increasingly so with the recent wave of government investments in selected banks. The space program is one example of an entirely government owned industry, and there are many other examples of public ownership at various levels of government.
The federal government might as well consider taking over the doddering auto industry, too. (I know, I know, the United Kingdom had a disastrous experience doing that, but there’s a right way and a wrong way to do everything. Besides, some industries are so essential to a country’s economy that making a profit may not be their most important function.)