The GOP is Screwed, and So Are We

Here’s a prime example of why the Republicans lost the election, and can’t hope to win anything back anytime soon: Nationalization: Is It the Only Answer to Save Banks?:

A year ago, it would have been unthinkable: Sen. Lindsey Graham advocating a government takeover of private banks — but that is exactly what he suggested today.
There is surprising support for a government takeover of banks.

“I would not take off the idea of nationalizing the banks” from the table, Graham, R-S.C., told George Stephanopoulos on ABC’s “This Week” program.

“This idea of nationalizing banks is not comfortable, but I think we have gotten so many toxic assets spread throughout the banking and financial community throughout the world that we’re going to have to do something that no one ever envisioned a year ago, no one likes,” Graham said. “But, to me, banking and housing are the root cause of this problem. And I’m very much afraid that any program to salvage the bank is going to require the government.”

Note that when it’s said that this is why the Republicans lost the election, it’s not to say that the American people, by and large, necessarily support anything as principled as capitalism or individual rights. But, they were certainly looking for something different in the election, and McCain and the Republicans simply weren’t it. They made essentially the same arguments as the Democrats and the Left, that government needs to run things because we can’t run them ourselves. They simply offered up a weaker, more muddied version that was bound to get lost amidst the consistency of the Obama message.

In any case, as long as the GOP is just another, slightly more “centrist” version of Obama and the Left, we’re all screwed. Unfortunately, that seems increasingly to be the case. By taking this position, Graham gives Obama the ability to say that he’s against precisely he’s actually for, and when he “changes back” to his original position, he can rest on the Republicans themselves:

“The fact that Lindsay Graham, a conservative Republican, says that nationalization should be on the table, I think underscores the sense of crisis,” Stuart Rothenberg, editor of The Rothenberg Political Report, told ABC News. “And that could give the president a good deal of political capital and leeway.”

Speaking on ABC’s “Nightline,” Obama himself dismissed the idea of a government takeover of the banks just last week.

“We want to retain a strong sense of private capital fulfilling the core investment needs of this country,” Obama said.

But some prominent economists, including Nobel prize winner Paul Krugman, say nationalization is the only way out of the out of the current financial crisis, given that the nation’s largest banks are now carrying a crushing half a trillion dollars in bad debt.

“The chances of your being able to do this without nationalizing at least a couple of really troubled banks are not too good,” Krugman told ABC.

This week, as part of Obama’s plan, the nation’s banks will start to undergo what are being called “stress tests” to find out just how much trouble they are in. When those results are in, Krugman says, federal officials will have only once [sic] choice.

That “only [one] choice”?

“They’re going to go in there and do a Claude Raines from ‘Casablanca’: ‘I’m shocked — shocked — to discover that these banks are in so much trouble financially.’ And then seize them,” Krugman said.

But they may have to find another name for it. [Emphasis added.]

Scared yet?

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