Fooling US Twice

Europe's neocons are abandoning the laissez-faire ship. From Spiegel Int: In a speech before the European Parliament on Tuesday, French President Nicolas Sarkozy suggested that European countries establish their own sovereign wealth funds to take ownership stakes in key industries.

"I don't want European citizens to wake up in a few months and discover that European businesses are now owned in capitals outside of Europe."

Sarkozy's use of the term "sovereign wealth funds" was deliberate. Most sovereign wealth funds are controlled by petrocash rich nations, like Russia and the Gulf states, and there are concerns they could go on a shopping spree and snap up Europe's tradition-steeped companies.

There is something to be said for tradition. While credit for steering the financial markets away from the Paulson poison pill has largely gone to the U.K.'s Gordon Brown, it was the Germans led by Angela Merkel who were able to move quickly and stem the debacle. You see the Germans remember what the pirate House of Morgan and his cabal of international thieves did to them in 1931 and unlike US they weren't about to be fooled again.

[the Canadian philosopher John Ralston Saul writes that "the first three aims of the corporatist movement in Germany, Italy and France during the 1920s, those that went on to become part of the Fascist experience, were “to shift power directly to economic and social interest groups, to push entrepreneurial initiative in areas normally reserved for public bodies” and to “obliterate the boundaries between public and private interest.”]

The Germans remember the economic disaster that fomented the fury leading to WWII. For them "nationalization" is not a dirty word. It's about looking out for "your own":
As private banks falter under the financial crisis, state-owned Sparkasse savings banks are enjoying a flood of new business as Germans deposit their money in the institutions based on a traditional bank model.According to a survey conducted by the mass-market daily deposits at Germany's 443 savings banks have increased by more than 1 billion euros ($1.4 billion) in the past two weeks. The country's largest Sparkasse, Hamburg's Haspa, has reported new deposits totaling more than 500 million euros. Cologne's savings bank is also enjoying a sharp rise with 355 million euros in new deposits, reported on Friday, Oct. 10. --Deutsche-Welle

The German/English move forced Wall Street's hand-- "socialize US banks" or see depositors rush to invest in an array of Europe's government guaranteed banks. So much for the market's ability to "self-regulate".

What this current financial crisis should make transparently clear is that commercial contracts depend first and foremost on the contracts we commit to as a society. And yet, one senses that in this country that simple reality continues to be resisted. That every American did not fall down laughing when John McCain suggested that by offering tax-cuts to working people Barack Obama was practicing "socialism" only demonstrates how brainwashed we have become to believe that the rich produce wealth independently.

Fortunately there are still a few sane heads who have a grasp on monetary policy. The Paulson plan was justly criticized by those, like former Treasury secretary, Paul O’Neill who simply called it ‘crazy.’ But their voices were largely drowned out by the market fundamentalists like Thomas Friedman and Phil Gramm, the neo-cons' true believers. It seems Americans are a very dogged lot once an idea has been drilled inside our heads, no matter how outlandish.

Eighty years ago this is what H. L. Mencken had to say about the attitude of the jury in the famous Scopes Trial: "the Fundamentalist mind, running in a single rut for fifty years, is now quite unable to comprehend dissent from its basic superstitions"

That is the intellectual rut that our financial leaders have left us to wallow in after thirty years of Reaganomics. As Andrew Lahde, the Santa Monica, Calif., hedge fund manager who made an 870 percent gain last year by betting on the subprime mortgage collapse, writes in his farewell letter to his investors: "Those who run our investment houses, banks and government-- the low-hanging fruit, i.e. idiots whose parents paid for prep school, Yale, and then the Harvard MBA, was there for the taking,” he said of our oligarchic class.

“These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government. All of this behavior supporting the Aristocracy only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America.”

The End of the Trickle Down Era is not going to be pretty. As Chris Hedges reports in "The Idiots Who Rule America" after compelling the working class (by stifling wages) to borrow beyond their means, Washington's laissez-faire policy has left government largely impotent-- Which means everyone loses. Now real wages have dropped, the national treasury has been drained for speculative commercial interests, while consumption, the reliably profligate engine of our economy, is withering. September retail sales are tumbling, 160,000 jobs were lost last month, adding to the three-quarters of a million lost just this year.

In short-- the pain is just beginning. But we'll be damned as "Anti-American" if we dare whisper the words: "democratic socialism." Better to pretend the Great Depression never happened.