Bush-McCain Bailout Plan Amounts to Nationalization of Markets

Historic economic recovery plans rely on massive government takeover and unlimited guarantees despite so-called "conservative" label.

Hot on the heels of the nationalization of American International Group (AIG) by Federal Reserve Chairman Ben Bernanke, Treasury Secretary Henry Paulson announced unlimited Federal government guarantees of money-market deposits. These government interventions in the market are unprecedented and have raised quiet, but intense, anxiety on both sides of the aisle in the U.S. Congress. Both Bernanke and Paulson are Bush appointees.

This incredible degree of government involvement in the economy failed to stem the widespread panic in financial markets despite the fact that the federal government now controls the bulk of the U.S. mortgage market, one of the world´s largest insurance companies, and is insuring up to $2 trillion in investments.

Meanwhile, Bernanke and Paulson are working on a proposal for an enormous federal takeover of the troubled mortgage assets that are considered a root cause of the current financial crisis. Democratic and Republican lawmakers have raised concerns about this "blank check" approach to government intervention in private markets.

This proposal closely tracks the proposal of "conservative" GOP candidate John McCain even though such intrusive regulation and federal government control of markets is entirely inconsistent with McCain´s anti-regulatory rhetoric on the campaign trail and his legislative record.

Some analysts have noted that this combination of government economic interventions is more consistent with that of right-wing Italian political parties, such as the Neo-Fascists, than it is to "true conservatism," which would seek an entirely market-based approach to the U.S. fiscal crisis – the worst financial catastrophe since the Great Depression.