No, not that one. This one: "Nationalization".
The terror the N-word raises on Wall Street and among the mouth-breathers of the GOP base has had a profound impact on the way Timmy & Co - Wall Street insiders, every one - have structured the taxpayer bail-out of corporations infamous for their greed and/or incompetence. Economist Joe Stiglitz (via a Must-Read Salon piece by Andy Kroll on the negatives of the bail-out) in a NYT op-ed last March put it this way:
Let’s take a moment to remember what caused this mess in the first place. Banks got themselves, and our economy, into trouble by overleveraging — that is, using relatively little capital of their own, they borrowed heavily to buy extremely risky real estate assets. In the process, they used overly complex instruments like collateralized debt obligations.
The prospect of high compensation gave managers incentives to be shortsighted and undertake excessive risk, rather than lend money prudently. Banks made all these mistakes without anyone knowing, partly because so much of what they were doing was “off balance sheet” financing.
In theory, the administration’s plan is based on letting the market determine the prices of the banks’ “toxic assets” — including outstanding house loans and securities based on those loans. The reality, though, is that the market will not be pricing the toxic assets themselves, but options on those assets.
The two have little to do with each other. The government plan in effect involves insuring almost all losses. Since the private investors are spared most losses, then they primarily “value” their potential gains. This is exactly the same as being given an option.
I think it was Krugman who encapsulated this strategy as "public risk, private profit". It is the opposite of good business sense, paying a lot and getting very little in return, buut that's what's required if we're going to save the bankers' asses without actually "nationalizing" the businesses they ruined.
The Obama Admin, full of Wall Streeters as it is, will not countenance actual nationalization even if the financial situation presents it de facto. The NYT is reporting today that we will end up owning 70% of GM. Despite that hefty investment, Obama refuses to put a govt rep on the BOD.
The latest plan for the troubled automaker, which is expected to file for bankruptcy by Monday, calls for the Treasury Department to receive about 70 percent of a restructured G.M.
Including the more than $20 billion that has already been spent to prop up G.M., the government will provide G.M. at least $50 billion to get the company through Chapter 11, people with direct knowledge of the situation said Tuesday. By some estimates in Detroit, tens of billions beyond that amount may be required.
Aides to President Obama have consistently said they would be reluctant shareholders, and they plan no operating role in the company.
“No one is going to put U.S. government employees on the G.M. board,” one person close to the ongoing discussions said on Tuesday.
The issue, of course, is control, especially control of profits. Essentially the Geithner corpo-friendly plan has the govt paying all the debts while ceding the profits to investor/executives and allowing control of corporate policy to remain in the hands of the same people who destroyed the company in the first place.
And all of this financial and public policy insanity is made necessary simply because the pearl-clutchers go pale and weak-kneed at the thought that the public should have anything whjatever to say about how they extort their profits. The next move is, obviously, that if they're govt-owned, they shouldn't be making profits at all. This is, of course, socialism, and it makes them livid.
Yet it is the logical end-point of the arguments they themselves (and Bush/Paulson/Geithner) used to justify the massive taxpayer bail-out in the first place. To wit:
If these banks are "too big to fail" then they are so important to the public welfare that they should NOT be in private hands. The nation cannot, by the banksters own admission, afford it.
If they should not be in private hands, then they should be nationalized to prevent their destruction for private profit by people so greedy they think the country exists for no other reason than to allow them to enrich themselves. If, under these perilous circumstances, we refuse to nationalize companies that could impoverish us for their own gain if they remain private, we have, in fact as well as in theory, made the United States an oligarchy, the largest the world has known since Imperial Rome.
It really is that simple. Nationalizing those corporations we have found it necessary to take over (to save them from their own greedy or incompetent management because their failure would mean the failure of the economy itself) makes this a democracy where the People are in control, not The Money. Refusing to nationalize those same companies means that eventually the economy will still crash (though not when it's salvagable - it will be well past that phase by then) but it also means that we have become a money-aristocrat oligarchy where corporations and the rich control everything and we are the peasants we were in feudal Europe 400 years ago, paying taxes to the landlords so they can buy fancy homes, employ acres of servants to do the drudge-work for peanuts, and pay their kids' vast gambling/drug debts.
Think about it. Just how scared are you of the N-word?