Are the bailouts socialist?


A conservative economist says yes.

And just the other day, I talked to another prominent conservative economist who suggested a somewhat similar plan. I asked whether all these plans didn’t smell of socialism. The economist’s answer: “I think that bridge has already been crossed.”

Actual socialists have been hollering that these plans are not socialist at all, but bailouts for the wealthy. Well, maybe some of them are. But Fannie and Freddie, who own 50% of the mortgages in the US, have effectively been nationalized by the federal government, as has AIG, the biggest insurance company in the world. And that is, without question, socialist.

But the bridge has been crossed. The credit markets have seized up, as witness California saying it may need a short-term federal loan because it can’t access the credit markets. That’s where we’re at now. Their can’t be a plan because, as a British banker said recently, “No one has experience with failure on this scale. No one.”

So, rightfully or wrongfully, the government will do whatever it deem necessary to unfreeze the credit markets, as if part of it is socialist, then so be it.