The Day the U.S. Economy Changed
Make no mistake: today's announcement that the U.S. Treasury will invest $250 billion of taxpayer money in private American banks marks a pivot point in how the U.S. economy thinks of itself.
Nothing this radical in government-sponsored financial engineering has occurred on such a widespread, systematic scope since FDR's alphabet-soup of make-work programs -- the WPA, the CCC, the TVA -- meant to save the U.S. economy during the Great Depression.
"The government's role will be limited and temporary," President Bush said in morning remarks at the White House. "These measures are not intended to take over the free market, but to preserve it."
Treasury Secretary Hank Paulson, former chief executive of Goldman Sachs, one of the pillars of U.S. capitalism, said he finds several elements of today's bank rescue plan "objectionable."
The U.S.'s most recent stab at nationalization: For a few months in 1952, President Harry S. Truman nationalized the steel industry on the eve of a strike. A few months later, the Supreme Court ruled against Truman's action and return the mills to their owners.
The U.S. has never been a pure-play laissez-faire economy. It is a regulated market. But today, it changes to something else -- a partially nationalized one. The question is: Is today's move, as Bush said, a temporary one? Or is it the first step in a march away from the sort of capitalism that defined 20th century America?
-- Frank Ahrens
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