BEHIND THE ECONOCATACLYSM - by Vilosh Vinograd
Up to $3 trillion in financial assets have been wiped out in the crisis so far—and supposed free-market principles are being abandoned in for a rapid centralization of power in federal hands to shore up the teetering edifice, a virtual melding of Wall Street and Washington. The Philippine radical academic Walden Bello writes in a primer on the crisis: Wall Street [is] effectively nationalized, with the Federal Reserve and the Treasury Department making all the major strategic decisions in the financial sector and, with the rescue of the American International Group (AIG), the US government now runs the world's biggest insurance company.
The bailout plan, drawn up by Treasury Secretary Hank Paulson, is dubbed the Troubled Asset Relief Program (TARP), and is the centerpiece of the proposed Emergency Economic Stabilization Act. It would give Paulson or his successor unprecedented powers. Under the plan, any firm selling assets to the government would have to give Washington the right to take an ownership stake in the firm. It would give the Treasury Secretary similar powers to cut deals with foreign banks. The left is concerned that the bill would bail out Wall Street but not "Main Street"—and even Republicans have had to adopt this rhetoric. For the right it is an embarrassment: a crash reversal of the long-repeated mantra that the "free market" would solve all problems. After a generation of neoliberal dogma and corporate globalization, these supposedly sacred principles are being abandoned by the administration with a vertiginous rapidity.
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