How bad is the financial meltdown on Wall Street? It's so bad that that bastion of free-market capitalism, the Wall Street Journal, takes a pass on commenting on the US government takeover of the insurance giant American International Group, Inc. (AIG) This follows the government takeover a little more than a week ago of the two largest mortgage lenders in the country, Fannie Mae and Freddie Mac. The federal government has essentially taken control of the housing industry in the country and taken a big chunk of control of the insurance industry. This was done by a Republican administration, largely applauded by Wall Street, and there is silence from the WSJ. Things must be bad.
But there is a lesson here too. For all the conservative bashing of government, these conservatives go to sleep at night knowing that if there really is a financial meltdown, there is only one institution with the size and resources to bail them out - the very government they so loathe. They count on it.
It is for this very reason that we the tax-payers who support with our taxes this lender of last resort have every right to demand regulation and accountability from these financial institutions. Because if they do fail we are on the hook.
The upside of this emergency takeover in the financial markets is that come January a new President, possibly a progressive President, is going to have "extraordinary leverage" over the national economy. It won't take legislation to make it happen because the government is already running these industries. Some socially responsible, positive change could come out of this. Assuming we aren't in a depression by then.