For all those who went hysterical screaming “socialism” at the thought of fed’s bailout of banks here’s some insight from Greg Ip, in a Washington Post column:
“Starting in 1946, Britain’s Labor government nationalized transport, energy and communications companies, and by 1971, a Conservative government had taken over the failing automobile manufacturer Rolls Royce….”
“….France, not surprisingly, went even further. When Francois Mitterrand’s Socialists took power in 1981, they embarked upon a massive wave of nationalizations. The new government added 39 banks to those already owned by the state, putting 95 percent of the French banking system in government hands.”
Compare that to Paulson’s bailout of banks driven by need to keep the financial system afloat, rather than the desire to own productive national assets..
It’s obvious that the government would sell its stakes gradually once the economy rebounds.
oh, here’s another interesting fact for those concerned about inflation..
Bank of japan stuffed its banking system with cash worth 30% of the GDP. It did not help bring Japan out of the lending slumber..it didn’t create inflation.
Fed’s $1.8 trillion in assets amounts to 12% of US GDP..