Bailout backlash: "Socialism for the rich"

Wall Street loves it and both presidential candidates support it, but the bailout of Fannie Mae and Freddie Mac has plenty of critics today, including a U.S. Senator who said, "Simply put, it is socialism." A former advisor to presidential candidate Ron Paul called it "the biggest policy blunder of all time."

A sampling of bailout backlash:

U.S. Sen. Jim Bunning, (pictured) Republican of Kentucky:

"This takeover of Fannie and Freddie is a calamity for our free market system. ... By directly investing into the mortgage market, the Treasury Department is acting like it is a hedge fund. ... Secretary Paulson is turning America into France of twenty years ago. Simply put, it is socialism."

Economist and former Ron Paul advisor Peter Schiff:

"Despite the near euphoria that the plan has sparked on Wall Street, the move will go down in history as the biggest policy blunder of all time, and will be credited as a pivotal point in the financial collapse of the American economy. ... The original idea that gave birth to Freddie and Fannie, which is to make housing more affordable to average Americans, should now be seen as farcical. Their new goal is to keep housing prices high."

Investor Jim Rogers, on CNBC Europe:

America is more communist than China is right now. You can see that this is welfare of the rich, it is socialism for the rich… it's just bailing out financial institutions. ... This is madness, this is insanity, they have more than doubled the American national debt in one weekend for a bunch of crooks and incompetents. I'm not quite sure why I or anybody else should be paying for this,"

Economist Nouriel Roubini, nicknamed "Dr. Doom":

Like the action taken in the Bear Stearns case and other recent government interventions and bailouts of private and quasi private financial institutions this is a form of privatization of profits and socialization of losses; it is socialism and corporate welfare for the rich, well connected and Wall Street.

--Peter Viles

Your thoughts? Comments? E-mail story tips to Peter Viles
Photo Credit: A.P.

Comments

[buz]

No doubt about it this is socialism. Not sure how to approach this from a trading standpoint. Right now the financial institutions will probably have a relief rally for a few weeks or a month. But the damage is still out there and I think the smart money will look to go short when the euphoria and all clear drumbeat starts up.

[Giacomo]

Just one of the ways this is a "Perfect Storm": it's an election year, and both major parties and their candidates are happy to put off dealing with this fiasco. Neither wants to be seen prescribing bitter medicine when the other side is offering free pie.

Perot and Ron Paul both tried to sell fiscal responsibility and look where it got them.

[Michael Snyder]

It's a misnomer to address this as a "communist" system. In function this administration has degenerated to the decadence of the Czars. And they've been able to do it because we've let them.
To vote for any incumbent in the state of California in just empowering the same corrupt system. While Feinstein chooses to ignore communications unaccompanied by payment, Boxer's staff dutifully cranks out form letters in response to the most ludicrous of inquiries. We've got Laura Richardson setting a shinning example and a President that doesn't show up to meetings he calls. Somehow this all has a striking resemblance to the Czar's court with Dick Cheney as Rasputin.
The only real question is what are we going to do about it? Frankly I'm convinced the two party system that's held in place by a defunct and easily corrupted Electoral College (remember hanging chads?) has simplified the business of corrupting our democratic process. Every election we're left with choosing the "lesser of evils" instead of a leader we can get behind. Only when we can vote our conscience instead of our fears democracy will have a chance.
Until we as individual Americans take responsibility for our government this spiral will continue. Don't look at me! Don't look at the guy next door! Look at yourself! Then decide what's important to you; then make it happen. Nobody else can do it.

[pablo]

If i was selling a house , i would sell in to this strength . This does not bode well for long term appreciation . Loans as we saw them 03-07 will never occur in our lifetimes. meaning price appreciation will never occur like that , in fact appreciaton above inflation rate may never happen again , either!!!

[anony]

2008 Election=Distraction
Neo-Con=Globalists, Oligarchs, Progressives, Socialists

Bye Bye American Pie

Bullsht= Federal Gov.

[alvin]

it's a little ironic that a congressman, the very body that created and authorized the GSE structure, now criticizes the treasury for having to come in and clean up their mess.

congress, despite years of warning from the Fed and others, not only let these entities grow into the behemoths they are today, they actually encouraged it.

Meanwhile, this bailout doesn't REWARD anyone but those who bought the debt that the government knew full well had it's implicit backing. EVERYONE else loses big, including we the taxpayers (of course by exactly how much only time will tell).

[Rational Renter]

Fiscal responsibility is not an impossible pipe dream. It's not what caused Ron Paul and Ross Perot to lose. Bill Clinton gave it to us, didn't he?

[mucker]

ntil we as individual Americans take responsibility for our government this spiral will continue. Don't look at me! Don't look at the guy next door! Look at yourself! Then decide what's important to you; then make it happen. Nobody else can do it.

Posted by: Michael Snyder

Read the full text of Michaels post and then follow his advice. Right in the name of Ron Paul as your choice for president. I will. If we don't act now then when?

[Laker]

Peter Schiff:
"The original idea that gave birth to Freddie and Fannie, which is to make housing more affordable to average Americans, should now be seen as farcical. Their new goal is to keep housing prices high"

I have nothing else to add.

[Joe]

I agree with many of Mr Snyder's points. I would like to add that it is most telling that the party in power refers to the proposal of national healthcare as "socialized medicine" which of course, in their small mindedness, would lead to the downfall of society, yet these people have socialized the housing debt while allowing the years of profit to maintain in the free market.

[tew]

Folks, it's the beginning of football season AND the final weeks of the baseball pennant races. Don't get distracted by this economics stuff. If you're all bothered it probably means your team isn't doing well or you don't have a decent plasma to watch the games on. :)

[Steve]

Where has this moron been, we have been bailing out major mismanged companies for years, directly and indirectly with tax incentives. Big deal the Fed will just print more.

[Doug in Toronto]

It's only socialism if someone else is the one being bailed out.

[Heather]

Roubini has it right. The golden parachute for the execs on top of everything else just adds insult to injury.

[Bryan Morris]

I am so damned tired of seeing the good name of socialism tarnished by using it to describe these "privatize the profits while socializing the losses" schemes. Call them what they really are - corporatism, crony capitalism, or (given the jingoistsic nationalism rampant today) fascism. These schemes are almost the opposite of socialism - they benefit the rich at the expense of the middle class and poor. Learn some political/economic history for cryin' out loud.

[Todd]

Thanks to the Bush administration, in one fell swoop I've gone from being a responsible tenant of a rent controlled apartment to a "homeowner" swimming in socialized debt--and all the Beltway Bastards and their friends are swimming in dollars.

[MyLessThanPrimeBeef]

My choices for the President of the United States

1st choice: write in 'People of the United States.'

2nd choice: each one of us writes in 'Myself' and give a campaign donation to yourself (I think that's legal, but check with your lawyer first).

3rd choice: musician/cowboy Michael Snyder.

No to Obama.

No to McCain.

Just say 'no' to anyone who doesn't oppose this bailout! (As Seamus Heaney's King Creon would say, 'Whoever isn't with us is against us!)

One of the papers of the perfidious England a few months ago proclaimed the death of capitalism immediately following the Bear Stearns bailout.

It lied..sort of, because, the way I see it, capitalism died again this last weekend.

So, here is the interesting question. If you are dead, wandering somewhere in hell or heaven, and someone kills you again, where do you go from there?

[MyLessThanPrimeBeef]

Michael Snyder, the president really didn't show up for meetings he called?

That reminds me of the Ming emperor Wanli, shortly before China was conquered by the Jurchens, who for years refused to receive his own ministers. When the Jesuit Matteo Ricci was summoned for an imperial audience, the befuddled Westerner simply just bowed before an empty dragon throne.

[Michael Snyder]

My Less Than Prime Beef,
Check out Bob Woodward's new book.. He actually played the part of a taped interview on Larry King where GWB said he didn't attend meetings deciding on the "surge" because he had other things to do. My question is what other thing had a higher priority than the lives of thirty thousand Americans and their families. Probably was lunch with Hank...

ps: Thanks for the plug :-)

[Alex]

Almost everyone denouncing this bailout is a libertarian or other free marketeer. Where are the liberals denouncing it as "corporate welfare"? Where are the conservatives denouncing it as "Foreign aid for the rich"?

The only principled people left in America are libertarians.

[Dandy]

No matter what we do as a risponsable citizen, this crisis is inebitable. Thanks for the people that didn't care of the invasion to the poor people of the middle east and still gave Bush "cons" a vote. He was never elected to be a president. He been a failure all his life. Now is Us the People of the United States of America. 911 is a made name prior to the September 11, 2001. "Investigate the 911 myth" If anybody still first smartest candidate to try to fix this mess, thats RonPaul. Now we can try with Pastor Chuck Baldwin as a real patriot of this nation. God Jesus! Bless America!

[unknown]

This is in fact Socialism!

Main Entry: so·cial·ism
Pronunciation: \ˈsō-shə-ˌli-zəm\
Function: noun
Date: 1837
1: any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods
2 a: a system of society or group living in which there is no private property b: a system or condition of society in which the means of production are owned and controlled by the state
3: a stage of society in Marxist theory transitional between capitalism and communism and distinguished by unequal distribution of goods and pay according to work done