From Liberty Bonds to Bailout Bonds?

The NY Times says that Barack Obama is contemplating letting small individual investors in on the bank bailout—wedding Main Street to Wall Street. Like a mutual or bond fund, you would buy shares, perhaps for as little as a few hundred dollars. You could lose money, but the downside would be padded by the government. And the upside could be substantial (if the economy has a healthy recovery):

The new funds are still under discussion, and they are unlikely to be established for several months, if indeed the plans go through at all.

But the comparison one industry official uses to illustrate the mistake that America must avoid is the large-scale privatization in Russia in the 1990s, which involved a transfer of entire industries to a few, well-connected oligarchs. That experience tarnished the idea of free-market capitalism in Russia and undermined its program to move toward a market economy.

“It is really, really important to allow Main Street in,” said the official, who was involved in discussions about the plan but who asked for anonymity because he was not authorized to speak about it publicly.

About Santi Tafarella

I teach writing and literature at Antelope Valley College in California.
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