Expropriate the Expropriators -- By Purchasing Their Stock?

In the wake of the $750 Billion Bush Bailout, and the even bigger $1.5 Trillion Geithner plan to create incentives for reform of the financial services industry, some economists are calling for a more direct fix: let the Government purchase common stock in banks and use the voting power of that stock to force real change.

An interesting story on that concept comes, surprisingly, from Fortune magazine's website. You can read it here: http://money.cnn.com/2009/02/12/news/banks.tough.love.fortune/index.htm?postversion=2009021213

The article explains that:

Treasury Secretary Tim Geithner said Tuesday that the administration seeks to restore the flow of credit in the economy by offering $1 trillion in financing for consumer and business loans, a $500 billion plan to induce private investors to buy troubled assets from banks and $50 billion for foreclosure relief.

Fortune then quotes an economist at Brown University to explain the alternative:

Ross Levine, an economics professor at Brown University, said if the government starts buying common stock in banks, it will show that it is serious about taking control of troubled institutions and protecting the taxpayer.

"If you go refilling the bank accounts of the architects of this crisis, people are going to have an emotional reaction," said Levine. "You can't make the recovery plan a direct gift to the existing owners and managers of these enterprises."

If the government actually owned common stock in banks, it would allow regulators to have more of a say in how the banks are managed going forward.

This is a real indication of how the debate in this country has moved sharply to the left. Can you imagine what would have been said if either the Carter or Clinton Administrations had engendered talk of federal ownership of bank stock? Not even FDR contemplated such a bold move.

In his grave at London's Highgate Cemetery, Karl Marx is surely smiling. In Chapter 32 of Das Kapital, he wrote:

The monopoly of capital becomes a fetter upon the mode of production, which has sprung up and flourished along with, and under it. Centralization of the means of production and socialization of labor at last reach a point where they become incompatible with their capitalist shell. That shell is burst asunder. The knell of capitalist private property sounds. The expropriators are expropriated.

I don't think Marx meant to say that the expropriators would be expropriated by the purchase of their common stock by the people . . . but then, who could have predicted that?

While We're At It, Why Not Fix The Student Loan Debacle?

You may remember that I previously posted about the problems with the privatization of student debt. http://jimcraigsworld.blogspot.com/2009/01/next-financial-bubble.html

Now there is a movement afoot to provide loan forgiveness of student debt -- a powerful shot of economic stimulus. If the millions of dollars of student loans were paid off or forgiven by the Federal Government, those recently-educated people, many of them with new jobs and new families, would pour the saved loan payments back into the economy.

But there is a more important issue. After the Government privatized student debt, the loan sharks in bankers' clothing surfaced, and are now literally crushing the lives of persons who were motivated to go (or go back) to college to better themselves.

You can help:

1. If you are on Facebook, you can join the FB group "Cancel Student Loan Debt to Stimulate the Economy": http://www.facebook.com/group.php?gid=46657437878

2. You can also sign the on-line petition on the issue:
http://www.thepetitionsite.com/1/Real-Economic-Stimulus-Forgive-Student-Loans

3. Write or call the White House, your Representative, and your Senators.

The Huffington Post has already noted the momentum behind this idea:
http://www.huffingtonpost.com/jon-chattman/forgiving-student-loan-de_b_164103.html

Let's make it a reality!