Citizens' Confidence

One hears loose talk these days about a lack of “investor confidence” in the Obama administration’s ideas about resuscitating “zombie banks,” those super-conglomerates whose liabilities exceed their assets.  For “investor confidence” read willing bankers. The folks who brought on the most profound economic collapse since the Great Depression, after receiving trillions of dollars from the federal government in capital infusions, loans, guarantees and central bank facilities as they await the government’s assumption of their toxic debt, are reluctant to get the banks working again because the Obama-Geithner plan is too vague or too improvised to give them confidence in the future. Come on! Get over yourselves, guys. Economic historians tell us there are just two strategies for dealing with economic crises of this magnitude: Roosevelt II and Roosevelt I--to muddle through like F.D.R., or to bust the trusts like T.R. If they don’t like strategy I, then it should be no news that strategy II is not far off.

Bankers should be relieved that for now President Obama has chosen to follow F.D.R.’s model. If not, they should tell us what they want from Mr. Obama and the country. But then they should tell the country why we should believe in them any longer. Why should the citizenry, the ordinary taxpayers, trust them, their expectations, and their dangerously smart ideas  any more as we continue to discover each day they are still gaming the system? Up to now they have kept their fresh ideas as closely guarded as their negative balance sheets were just a few month ago. Let them speak up and win the nation’s confidence; and if they fail–and they probably will, because the titans of finance, like mainline economists, are devoid of any fresh ideas–then it is time to nationalize the banks until the state can regain the full value of its multiple subsidies.  “Better a temporary ward of the state,” concedes that hoary voice of capitalism The Economist, “than a permanent zombie.”

Advertisement

"The Lemon socialism” that in good times gives the profits to the financiers and asks the public to eat the losses in bad times is not a capitalism worth waiting to revive.  It is time for a little boy to shout out, “The emperor has no clothes,” and for the adults to get on with building a new banking system they have been too afraid or too blind to do until now.

Drew Christiansen, S.J.

Comments are automatically closed two weeks after an article's initial publication. See our comments policy for more.
9 years 6 months ago
Here on the ground, instead of on the TV, the banks are still doing their work loaning money. The recession may not be over, but what we're seeing now looks like the inevitable fallout from what went on months ago. In a couple more months, it will seem as if this all vaporized.
9 years 6 months ago
"Bankers should be relieved that for now President Obama has chosen to follow F.D.R.’s model". He's going to start a war?

Advertisement

The latest from america

Youths attending a pre-synod meeting participate in the Way of the Cross at the Basilica of St. John Lateran in Rome on March 23. (CNS photo/Paul Haring)
The meeting of the Synod of Bishops on young people is an opportunity for an ongoing conversation between everyday lived experience and church teachings.
Michele DillonSeptember 21, 2018
Pope Francis ends his official visit to Vilnius on Sunday evening at the Museum of Occupations and Freedom Fights, housed in the former headquarters of the K.G.B.
Edward W. Schmidt, S.J.September 21, 2018
Cardinal Joseph W. Tobin of Newark told the people of his archdiocese Sept. 21 that Pope Francis has granted his request that he stay at home to remain with them during this "time of crisis" in the U.S. church.
Catholic News ServiceSeptember 21, 2018
Girls gather for celebrations marking the feast of the Assumption in August 2012 in Aglona, Latvia. Twenty-five years after St. John Paul II visited Lithuania, Latvia and Estonia, Pope Francis will make the same three-nation visit Sept. 22-25, stopping at a number of the same places as his saint-predecessor. (CNS photo/Ints Kalinins, Reuters)
He is the second pope to visit these Baltic nations. John Paul II came to the region in September 1993, after the collapse of communism, and was welcomed as a hero. Pope Francis comes exactly 25 years later, but much has changed since that first papal visit.
Gerard O’ConnellSeptember 21, 2018