jmkeynes

Time Not for a Bailout, But for Nationalization

Excellent article

So, lets take a poll of Seeking Alpha journalists to see where they stand:

a) Corporate Socialist (Socialism for the Rich),

b) Free Fall Market Nihilist (the End is Near, Short Everything),

c) Plain old Democratic Socialist (we need a Swedish style bailout),

d) Other/confused

Brad is clearly in the democratic socialist camp, which is my favorite too.

I assume that everyone if familiar with Socialism for the Rich already. The Free Fall Market Nihilist position is described below.



The Rise of Free Fall Market Nihilism

The latest financial crisis in the US is forcing old economic ideologies to reinvent themselves. We're long past the old socialism versus capitalism dichotomy.

Many on both the left and the right will object that the $700 billion dollar bailout plan really amounts to Socialism for the Rich.

The left favors a traditional, democratic form of socialism. So, they tend to support the approach the Swedes took when their banks needed bailouts (i.e. give taxpayers an equity stake in the banks being bailed out).

Libertarians, however, are having a harder time of it these days.

Just as there are no atheists in fox holes, we're starting to find that there are no die hard Libertarians in times of financial crisis - unless, of course, you count those who are short the market.

True believers in libertarian dogma always want the government to stand aside regardless of the consequences.

But, there are also those "pragmatists" who can espouse either a Libertarian dogma or a Corporate Socialist dogma depending on their financial position.

If you and the corporation you manage would benefit from a government bailout, then opt for corporate socialism.

But, if you don't manage a company in need of a bailout then short the market and opt for Free Fall Market Nihilism.

Whereas market bubbles are fueled by self-fulfilling optimistic prophecies, market crashes are fueled both by self-fulfilling pessimistic prophecies and naive free market ideology.

So, during times of financial crisis, Free Fall Market Nihilists short the market and then also cynically espouse a naive libertarian ideology that firms, markets, and even entire economic systems should always be allowed to fail.

The Free Fall Market Nihilist's mantra goes as follows:

"Government intervention is always wrong. In the long run, free markets will always correct. So, bring on those waves of creative destruction: The greater the financial destruction the better. The world is coming to an end, I've shorted the market, and so should you!"

So, lets take a poll of journalists at the Economist to see where they stand:

a) Corporate Socialist (Socialism for the Rich),

b) Free Fall Market Nihilist (the End is Near, Short Everything),

c) Plain old Democratic Socialist (we need a Swedish style bailout),

d) Other/confused

Puts Instead of Shorts? Today's Activity

It is doubtful that all the contradictions in the SEC's temporary ban on short sales will be worked out before the ban is lifted.

However, the existing rules against naked short selling will be enforced and they're not going away.

So, if you want to make money as a naked short seller, you may have to go elsewhere.

Speaking of which, I hear that Brazil is now promoting a few secluded beaches where naked short sellers will be allowed to congregate. However, I don't think they'll be allowed to buy or sell anything. :-)

Hank Paulson: Leading Us to the Next Bull, Soon

Lower oil prices will help kill off investments in alternative energy infrastructure. Why build windmills when oil is cheap, right?

Wouldn't it be much better to re-inflate the housing bubble. That way, instead of building windmills and solar energy farms, we can go back to "investing" in big houses, summer homes, etc. The bigger the better!

As long as the Chinese and Saudis are willing to lend us money, why just buy a house that fits your needs. Wouldn't it be much better to buy one with extra bedrooms, even if you never use the rooms. That way you can make more money when you sell the house. Right!

Better yet, why not buy a vacation home or two as well. Even if you don't have time to use them and they stand empty, you can make money on them with - especially with all the tax breaks congress has for home owners.

So, let's keep the American dream alive by investing more and more money on big houses (even if we never get around to visiting all the rooms) and vacation homes (even if we never take vacations).

Why invest in wind energy and solar energy when investing in housing is so much more fun an profitable! Let someone else worry about about global warming, we just want to make as much money as we can now.

So, three cheers for the Arab oil states and cheap oil. And three cheers for housing bubbles that never have to burst.

Go America. You are going to deserve what you're going to get. Unfortunately, you may just take the rest of the world with you.