The bailout is not the end of capitalism
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TEXT OF INTERVIEW
Renita Jablonski: So this morning, a bailout in Asia — of course, a fraction of what we’re spending in the U.S. As part of the plan here, the Treasury is pouring $125 billion into the nine biggest banks in the country.
It’s still hard to know what to make of these moves, let alone how to characterize them. Time for Fortune Magazine’s Allan Sloan to weigh in. What do you think, Allan?
Allan Sloan: Well, I think no one has seen anything like this ever, so people are making up it as they go. And I hear that sometime next month, there’s a presidential vote in the United States, is this true?
Jablonski: Ah you know what, I think that’s coming up here, yeah.
Sloan: Right. So with all of this, things have to be reduced to a soundbyte. So it’s nationalization — the end of capitalism as we know it. And just realizing that people are doing the best they can and have no idea what to do, that all disappears and everyone races to put a brand on it and then shriek.
Jablonski: And so what are you doing in this case? Is this the end of capitalism the way you look at it?
Sloan: No, it’s not even remotely the end of capitalism. If you look at the terms of the investment the government is making in these nine banks, boy, I would kill for somebody to give me that much money and exert so little control over my life. I mean, if Paulson has got $100 billion looking for a home, I mean I’m there.
Jablonski: But there are some that would say just the fact that it was Henry Paulson, that it was the government making this kind of deal with banks, is a step away from capitalism.
Sloan: It’s a step away from their definition of capitalism. I mean, you have a minimum wage law — that’s a step away from capitalism. We have unemployment insurance, that’s a step away from capitalism. We have bank deposit insurance. I don’t hear any of the banks saying bank deposit insurance is socialistic, which it is. So the parts they like they want to keep, but having the government come give them money at 5 percent — which is incredibly cheap — have no strings on it and that’s nationalization, well that’s nonsense.
Jablonski: And what do you say to all the people listening that are shaking their heads saying, “Yeah, but in the end, what’s in this for me?”
Sloan: Well, I mean I’m not a great fan of any of this, but I think what they’re doing here is a lot better than the original plan, which I considered ridiculous, to go out and try to buy trashy securities from banks. What’s in it for us is avoiding the risk of a worldwide financial collapse. And I really don’t like some of these bigger institutions, which have really messed up bad, and now they’re getting cheap money and having the nerve to whine about it — but show me an alternative.
Jablonski: Allan Sloan of Fortune Magazine. Thank you so much.
Sloan: My pleasure, Renita.
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