Is America entering socialistic jargon? Socialists like Indira Gandhi, Hugo Chavez of Venezuela are famous for their nationalization policies. Now America too is stepping into the shoes. In a recent move, the country has taken over three topmost corporate house of the world.
Two of the nationalized corporations Fannie May and Freddie Mac are biggest mortgage lenders of the world with $5 trillion on mortgages and loans on their books of accounts. This is five times the National GDP of India to put things comparatively. The third, American International Group is the largest Insurer in the world.
This has stunned Indian leftist who suspect that the step is taken to rescue the rich shareholders of the corporations. But in practice that is not. The US government will acquire 79.9% shares of these corporations at virtually zero cost. So the rich shareholders of these companies have been wiped out. All the CEOs of these companies too have been sacked.
From the perspective of US government, this is the rescue of the ordinary people or the masses, to put things in socialistic terminology. Because the ordinary people need mortgages, housing loans, insurance cover and annuities. The take over of AIG would save millions of policyholders, who otherwise would have lost their coverage and annuities. Had these corporations been allowed to get liquidated as happens in most cases in capitalist world, the resultant financial panic would have put, not only the USA in another ‘Great Depression’ but also would have world wide repercussions, putting pressure on most economies of the world.
Therefore the Capitalist too have to resort to socialism at times to rescue masses just like the socialists have to take capitalist approach in some measure to benefit masses as is the case with China.