As per Nouriel Roubini-

This biggest bailout and nationalization in human history [Fannie and Freddie] comes from the most fanatically and ideologically zealot free-market laissez-faire administration in US history. These are the folks who for years spewed the rhetoric of free markets and cutting down government intervention in economic affairs. But they were so fanatically ideological about free markets that they did not realize that financial and other markets without proper rules, supervision and regulation are like a jungle where greed – untempered by fear of loss or of punishment – leads to credit bubbles and asset bubbles and manias and eventual bust and panics.

The ideologue “regulators” who literally held a chain saw at a public event to smash “unnecessary regulations” are now communists nationalizing private firms and socializing their losses: the bailout of the Bear Stearns creditors, the bailout of Fannie and Freddie, the use of the Fed balance sheet (hundreds of billions of safe US Treasuries swapped for junk toxic illiquid private securities), the use of the other GSEs (the Federal Home Loan Bank system) to provide hundreds of billions of dollars of “liquidity” to distressed, illiquid and insolvent mortgage lenders, the use of the SEC to manipulate the stock market (restrictions on short sales), the use of the US Treasury to manipulate the mortgage market (Treasury will now for the first time outright buy agency MBS to manipulate and prop up this market), the creation of a whole host of new bailout facilities (TAF, TSLF, PDCF) to prop and rescue banks and, for the first time since the Great Depression, to bail out non-bank financial institutions, and a whole range of other executive and legislative actions (including the recent bill to provide a public guarantee to mortgage for banks willing to reduce their face value).

This is the biggest and most socialist government intervention in economic affairs since the formation of the Soviet Union and Communist China. So foreign investors are now welcome to the USSRA (the United Socialist State Republic of America) where they can earn fat spreads relative to Treasuries on agency debt and never face any credit risks (not even the subordinated debt holders who made a fortune yesterday as those claims were also made whole).

Like scores of evangelists and hypocrites and moralists who spew and praise family values and pretend to be holier than thou and are then regularly caught cheating or cross dressing or found to be perverts these Bush hypocrites who spewed for years the glory of unfettered wild west laissez faire jungle capitalism (and never believed in any sensible and appropriate regulation and supervision of financial markets) allowed the biggest debt bubble ever to fester without any control, have caused the biggest financial crisis since the Great Depression and are now forced to perform the biggest government intervention and nationalizations in the recent history of humanity, all for the benefit of the rich and the well connected. So Comrades Bush and Paulson and Bernanke will rightly pass to the history books as a troika of Bolsheviks who turned the USA into the USSRA. Fanatic zealots of any religion are always pests that cause havoc and destruction with their inflexible fanaticism; but they usually don’t run the biggest economy in the world. But these laissez faire voodoo-economics zealots in charge of the USA have now caused the biggest financial crisis since the Great Depression and the nastiest economic crisis in decades. So let them be shamed in public for their hypocrisy and zealotry that has caused so much financial and economic damage.

I knew it wouldn't take long for someone to blame Bush. 

If you think Bush is the cause of this problem, you should really take a look at the bigger picture.  It's funny to complain about socialism and nationalism when Obama is the candidate of that.

Our economy is already somewhat socialist and has been since FDR. We don't call it that though, we call it 'mixed.' Its quite a stretch to start calling it 'communism' lol. 

How does OUR economy translate to YOUR government?  Did you throw off one monarch for another?

Where did I say that Bush alone was the cause of this problem??? I've never said that Bush is explicitly to blame for this. Although, his administration has been running the country for the last 8 years some of the responsibility must fall on whomever is president at the time. Otherwise no one could blame Carter for the state of the economy while he was in office.

Obama, McCain, democrats vs republicans blah blah blah. Please kindly throw all that trash out of your mind. That's all largely meaningless right now. What is meaningful is that the financial system of the U.S is in deep trouble and instead of petty jibes at the other party or candidate, what's needed is to fix the problem! I already stated in a previous thread posted today that NEITHER candidate has a solution for this. They're both clueless on this one.

True, but what's happened in the last few weeks is unprecedented. Major corporations that are 'too big to fail' will be protected by socialist safety nets (paid for by you the taxpayers) while average joes will have to face the indifference of capitalism. Again, privatizing the profits while socializing the losses!! This has been done before, in fact the bailout of AIG was done with a clause invented in 1932 when the Feds tried to bailout companies then. It didn't work then and it won't work now, only this time the scope and depth of the nationalization and bailout is much more extensive!

Directly, it doesn't. Indirectly, it relates massively. Almost 50% of our foreign trade is with the U.S. You go down, we go down. Unless, of course we decide to switch our trade with China, in which case we'd probably be "liberated" by our good friends from the south!

Here's another gem from newsweek entitled "Wall Street's Business Model Has Collapsed"

http://www.newsweek.com/id/159334

Again, stop listening to my idiotic rants. Go out and research this event for yourselves and you'll see it's quite extraordinary!

Not really a bad idea when you think about it.  Look how Germany and Japan made out.

(The Mouse that Roared)

In communist America, economy buys you!

~Zoo

It's a fairly understandable political reaction in some ways - the politicians like to benefit from the upside when things are going well, but as soon as they start going bad, they don't like it so much. A free/liquid financial system has advantages (prices are more accurate, adjust faster, etc.), but the downside is increased volatility (i.e. risks). Meanwhile you have the far more problematic political issue that you only have a short term horizon (~4 years) to think about, and so care more about the short term than the long term. Thus you're going to favour 'short term gain for long term pain' policies. Bailing out failing institutions is a classic example of this. In the case of investment banks/other collapsing financial institutions, it's basically saying 'you're too big to fail, we don't want all that negative publicity/job loss/other, so we're going to bail you out'. The end result? Those same companies now know they can take unfavourable risks, because if they work out well they benefit from the upside, and if they go sour, the government bails them out. So tihs policy is storing up some pretty terrible problems for the future.

The true market solution? Leave the companies to collapse. The justification for intervening+buying up assets would be if you as the government know they are worth more/as much as their current value, i.e. that you know their true price better than the market, and hence it wouldn't be bailing the companies out, but simply acting in taxpayers best interests. Meanwhile if there are actual market imperfections (e.g. issues of insider trader/informational asymmetries), then look to correct those. One of the causes of the resulting credit crunch in the first place was workers contracts being such that they would be rewarded via huge bonuses for the upside and be limited to the loss of their job if the risk didn't pay off. These sorts of policies are now extending that same problem to the companies themselves, showing that the lessons really haven't been learnt, and we have bailing out/nationalisation, and no doubt a string of over the top regulation to stifle the markets. The quick shock from allowing the markets to take their course may be a tough bullet to bite, but long term it also is likely to be the best course of action.