Capitalist Socialism and the Net Net of It All
The largest share redistribution of the country’s financial companies is about to take place right before our very eyes. This is the final crescendo of the Financial Crisis of 2008: Massive share sales of the strongest banks that are standing right now. ..
All of a sudden, showing strength for the past several weeks and clamoring to exit the TARP and government meddling has resulted in a mandatory stock sale by these same banks. So JPM, AXP and any bank wishing to exit the TARP, must prepare to dilute their current shareholders. That dilution is rather severe, but the devil’s in the details.
The ownership of the nation’s most important companies is being quasi-socialized, by transferring ownership to the “public” via the hands of the institutions, those same banks handling the government’s massive new injection of liquidity. The institutional buyers will include a larger and larger chunk of pension dollars. These pension funds, like CALPERS, are buying these share distributions hand over fist, along with many nationally strategic banks and corporations. They’ve figured out the only way to ensure continuity in the nation’s retirement support system: to become direct shareholders. Voila, you’ve got socialization right before your very eyes.
But it’s not really some ignorant version of Canadian or French socialism. This is capitalist socialism, not socialist capitalism. Huge difference. And it’s Jumbo size, in the true American spirit. This young nation of 235 years was able to follow Keynesian demands to offset a depression in terms of output. When a country with a growing economy like China slips, or has to burp from indigestion, the entire planet will feel the shock. Whether that was an intentional tap on the breaks via controlled devaluing of the Yuan is beside the point. Although that’s exactly what it was, there’s another issue. The financial crisis triggered by China’s Great Burp of 2008 resulted in the American Recovery and Reinvestment Act of 2009. And TARP, and PIPP, etc…
In the States, the capital structure of those banks handling this influx of funds is ballooning to unimaginable heights. This is a mandatory inflation of their balance sheets. This is the Fed and the Treasury forcing the new supply of dollars onto their hands to buy the shares of the companies now about to have an equity offering.
The Federal Reserve is now the largest bank with a balance sheet that went from $6 Billion to $1.3 trillion in about 6 months. For their governments, including the UK, France, Canada and now Venezuela, Bolivia, perhaps soon Ecuador, China (obviously), own the actual companies, or portions thereof. And therein you have it ladies and gentlemen: This is American Capitalism adapting to compete with Chinese Capitalism, where the state’s role not only yields the companies an advantage, but also provides the government with national security. For China, that security is in the form of owning sources of raw materials. For the United States, and Western Capitalism, security comes via the almighty US Dollar (for now). And funny how all major global commodities are priced in US Dollars. When there was a massive dollar shortage last year, it was resolved via bi-lateral lending facilities with the G-20 Central Banks and the Federal Reserve. National security through state supported champions of global commerce. The need to cross borders, currencies, regulatory frameworks, governmental oversight, etc…, is another matter.
This full scale conversion to Chinese Capitalism around the globe is both the cause and effect of the Financial Crisis of 2008. But everywhere you look, on the tags, it says “Made in The United States”.
Proprietary Traders Worldwide
