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OpEdNews Op Eds    H3'ed 3/23/20

Debt Forgivness and Nationalization Are the Answers to the Economic Crisis - PaulCraigRoberts.org

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The US airline companies have bankrupted themselves by buying back their stock in an enrichment scheme for CEOs and board members. With the impact of the virus on their revenues, Congress is handing them a $50 billion bailout. Instead of being bailed out they should be nationalized.

In the health and economic crisis in which we find ourselves, the government is going to need all the public trust it can get. Bailouts of those who caused their problems and ours won't meet the fairness test.

As I previously wrote, nationalization is a four-letter word for many, but it actually offers a chance to correct for the decades of deregulation and concentration and thereby restore competition to the economy. Nationalized banks too-big-to-fail, for example, can later be broken up and the pieces sold back into private hands. Commercial banks can again be separated from investment banks, and concentrated financial power can be broken.

Now that we know that markets are not self-regulating, we can restore sensible financial regulation and require banks to lend for productive purposes, not for financializing and leveraging existing assets. The US financial system has not served the productive side of the US economy for a long time.

While ordinary heavily indebted Americans are losing their jobs right and left as businesses close, shopping center lobbyists are asking for a $1 trillion guarantee. The hotel industry wants $150 billion. The restaurant industry wants $145 billion. The National Association of Manufacturers wants $1.4 trillion. (https://www.cnbc.com/2020/03/21/coronavirus-1-trillion-rescue-package-might-not-be-enough-for-businesses.html) Food service distributors are in trouble. Boeing wants $60 billion funded in part by loan guarantees. Local and state governments need support. The US conference of mayors wants $250 billion. The list is endless.

And what is to be done for the 40% of Americans who, according to a Federal Reserve study, cannot raise $400 in cash without selling personal property? How are the large number of uninsured going to be cared for during this health crisis? Where will hospitals and medical practices get the money?

The only solution is to nationalize health care so that the bills can be paid. We cannot survive large numbers of infected and jobless people roaming the streets raiding for food and whatever they can take.

The only solution for the economy is debt forgiveness for the ordinary people and nationalization for the companies. Trump indicated that aid might be given in the form of an equity stake, and later sell the government's stake for a profit in a privatization when things return to normal. This would be a partial nationalization. Much better to go whole hog as it allows a cure for concentration and deregulation.

The pandemic has made it clear that a society of self-seeking individuals is not a society. A society is a social system. A successful social system is one that can support its members. Once a self-sustaining social system exists, then there is a basis for people to branch out on their own. But without a sustainable social system, there can be nothing.

To create a sustainable society in the United States requires the abandonment of dogmatic ways of thinking. Old ideologies are in the way. We and our leaders must think creatively if we are to successfully deal with the health and economic crisis.

 

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Dr. Roberts was Assistant Secretary of the US Treasury for Economic Policy in the Reagan Administration. He was associate editor and columnist with the Wall Street Journal, columnist for Business Week and the Scripps Howard News Service. He is a contributing editor to Gerald Celente's Trends Journal. He has had numerous university appointments. His books, The Failure of Laissez Faire Capitalism and Economic Dissolution of the West is available (more...)
 

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3 people are discussing this page, with 3 comments  Post Comment


Rob Kall

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With the FED offering to buy all kinds of debt, perhaps the best way to achieve nationalization is to pass legislation so that,with some criteria, the things the FED buys become nationalized.

Submitted on Monday, Mar 23, 2020 at 1:51:42 PM

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Lance Ciepiela

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Yes, of course, 'the FED' itself is 'a privatized banking cartel' that has never been fully independently audited - candidate Trump had hinted 'it's so important to audit the Federal Reserve System' but 'the FED' has already slashed the interest rates to nearly zero in an attempt to stem the economic fallout caused by the COVID-19 virus so it's now 'all hands on deck' as 'we ride this out together'. #DebtJubilee. #FixTheEconomy.

Submitted on Monday, Mar 23, 2020 at 2:23:23 PM

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Michael Dewey

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This popped into my head today about the Nationalization thoughts. Since I love the idea of Public Banks, and with there being 12 Branch Cities of the Fed (Is that right have not heard for a while?) lets start switching the 12 branches of the Fed into Public Banks. Am against one big anything but we got what we got. With that train of thought think of the airports,,, they are sounding like about to be turned into Public-Private Utility kind of set up. How about States ownership of the oil companies?

Submitted on Tuesday, Mar 24, 2020 at 1:37:56 AM

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