Seven Nations Attempt to Find Solution to Economic Problems
This New York Times article discusses a plan that the US and six foreign governments are considering to rescue the financial industry. The seven nations involved are the United States, Britain, Germany, France, Italy, Canada and Japan. One main part of the plan is for the government to “infuse American banks directly with cash and take ownership stakes in return.” Britain has already done this, and many economists fear that if the other nations do not follow suit, “it could destabilize the financial system, because money may flow to Britain from countries without those same guarantees.” Barry Eichengreen, a professor of economics at the University of California, Berkeley believes “the British could suck deposits from continental Europe and even the United States.”
Nationalizing our banks? If the goverment owns a bank or company, then they have direct control over the actions of that enterprise. Wouldn’t the increased government involvement in the economy be a step towards socialism? Part of the reason that the US economy was so rich is the system of capitalism and the concept of free markets. Any part that the government plays in that role could easily be misinterpreted by citizens. If the US is going to agree to this plan, they should clearly explain it to citizens before they begin to be accused of being communists.