USA: After Ultraliberalism, Dictatorship?

The Paulson Plan is about giving extraordinary powers to the Department of the Treasury. Would America lose her soul to save her banks?

In France, everybody applauses the ambition of the Paulson Plan, aimed at saving banks thanks to the purchase with public money of 700 billions of “toxic” credences, subprimes, but also other products, such as “swaps” nobody would currently buy. It’s a formidable problem indeed.

These Yankees have nerves and resolution! But nobody seems to notice this project’s fineprint, which the Secretary of the Treasury, a business banker by profession, has elaborated. If it were adopted as it is written now, (which is yet unsure, thanks to the Democratic majority in the Congress), the Secretary of the Treasury (whoever that would be) would get extraordinary powers: to hire whoever he wants, including his Goldman Sachs friends, to bypass the public market code to hire private contractors, all of this without any control, as that text states that the Secretary of the Treasury’s action could not be studied by any state commision, nor a justice court. This would result in some kind of dictatorship in the land of the separated authorities, and of the control of the executive by the judiciary system, and the Congress would now depend upon the market authority.

Dictatorship in America

Tocqueville would roll in his grave! It is clear the administration want some juridical insurance as soon as we realize this $700 billion is much more than what would be required to save the banks from this abyss.

This could also imply that the Treasury would bail out the rotten assets at their market price when they’re currently worth less than 20% of it. A huge political financial scandal chest would then be implemented.

The reason members of Congress are so reluctant to to vote for such a bill then becomes obvious. They exact many changes to be amended while Paulson and Bernanke, the Fed’s president, threaten them with a major market crash if the Plan doesn’t get voted soon enough.

The answer is now in the hands of the Congress and of both the presidential candidates, whose agreement is required in order to reach the missing consensus between Democrats and Republicans. Their agreement could save America from that crisis, but it might cost America some of her soul.