How Much Nationalization Is Appropriate?

We in the United States live in a country with a strong tradition of private ownership of companies. In recent days, we have seen changes that border on nationalization:

• The support given to JP Morgan Chase in its purchase of Bear Stearns

• The bailout of Fannie Mae and Freddie Mac

• The take-over of AIG, providing a $85 billion loan in exchange for 80% of the company

• Extension of FDIC guarantees to money market accounts

• The Fed's purchase of commercial paper, to support that market

• Most recently--the Fed's decision to start lending directly to corporations

How much more of this can we expect to see in the days ahead? What indirect impacts will this have on American businesses? Where does all of this end?

The purpose of this post is to offer readers a chance to talk about where they see this issue going. Below the fold, I offer a few thoughts on what areas arguably need federal support, and a few implications if the country moves toward more nationalization of companies.

Organizations possibly needing more federal support

Bankrupt large banks (or even small banks)

FDIC insurance is only $250,000 per account, dropping to $100,000 an account January 1, 2010. This limit is fine for personal accounts, but it is not nearly enough for companies (or governmental organizations) with thousands of employees. These companies spend more than $250,000 for payroll each pay period. They are also likely to need accounts with very large balances in order to issue checks to vendors. If the banks that handle these accounts are allowed to go bankrupt, the corporations with these accounts might lose a large amount of money, and would have difficulty with future payroll checks and checks to vendors. While some businesses could split their accounts among banks, this becomes difficult if dozens of banks are needed for ordinary transactions.

Federal Deposit Insurance Corporation (FDIC)

The FDIC guarantees bank deposits, now up to $250,000 per account, but does not have much to in actual funds to back up this guarantee (something like $45 billion). The usual method of obtaining additional funding is by charging higher insurance premiums to banks for the coverage. In the recent past, these fees have only amounted, in total, to a few billion dollars per year. It is doubtful that the fees can be raised to a high enough level that they will pay all of the losses occurring--without bankrupting additional banks.

Pension Benefit Guarantee Corporation (PBGC)

The PBGC is similar to the FDIC, except that it guarantees the payment of pension plans. It has exactly the same problem in terms of funding that FDIC has--the methodology works fine for an occasional bankruptcy, but not if there are multiple pension plans failing at the same time, because they hold securities that no longer have value, or because they are invested in the stock market, and the stock market has not increased as much as planned.

Insurance Companies

Insurance companies are not the first to be affected by problems with investments, but as more companies and governments default on their bonds, they are likely to be affected as well. Insurance companies are covered by state guarantee funds in the case of insolvency, but the coverage offered by the funds has many exclusions and low limits. These funds are assessment plans that collect funds from solvent insurers to pay for those that are insolvent. This approach works well for an occasional bankruptcy, but not if there are multiple large insurance company failures.

Oil and Gas Companies

Oil and gas companies are frequent targets for government takeovers for a number of reasons. For one thing, governments see them as a possible source of extra revenue. Also, if rationing is necessary, it may be easier for rationing to be carried out according to governmental plans, if a company is under government supervision. Another issue is price subsidies; the prices charged by oil companies may be perceived to be too high for consumers. Another consideration may be declining production. If the government is in charge, there can be no question whether the amount of exploration and drilling is adequate.

Parts of the Electric Utility Industry

We know that the grid has been neglected for years. No one has clear responsibility for maintaining and upgrading it, so this is a logical area for governmental support. Also, if there are bankruptcies of companies necessary to electricity transmission over the grid, the federal government may want to intervene to prevent service interruptions. Another area where government support may be needed is in the funding of new nuclear plants, if these are added.

Railroad Tracks

If we want to upgrade our railroad system, some might argue that the best way would be to have the federal government take responsibility for maintaining and upgrading the railroad tracks, similar to the way it maintains the interstate road system.

Airline Industry

If airline service to smaller cities disappears, so will the prospects for new industries for these cities. Some are likely to argue that the airlines need support to maintain service to smaller airports (or to stay in business at all).

Auto Manufacturers

If General Motors and Ford go bankrupt, should the government just stand by?

Housing Problems

A federal program to assist in homeownership, and help stop falling prices, has been proposed.

New manufacturing

We have off-shored a huge amount of manufacturing. If we want to bring some of this manufacturing back on-shore and financing is still very tight, it may be necessary for the federal government to provide support to the new manufacturers.

State and local governments

I understand that California is now looking for loans. In the months ahead, there will no doubt be many others. I don't think state and local governments can be nationalized, but they can come to depend on assistance from the federal government.


Need for ongoing infusion of funds The reason all of these organizations (except the oil and gas companies) need help is because they are short of funds. If they were short of funds before the first infusion of funds, they are likely to still be short of funds later, especially if the current financial problems are not just the result of a cyclic downturn. It seems likely the downturn will last, because the total amount of debt outstanding is unreasonable relative to the amount of underlying resource. In addition, oil and other energy prices are now higher, because of oil shortages. The higher energy prices make debt more difficult to pay back, and are likely to limit future growth.

Government as poor business manager Governments have a reputation for hiring people who are not necessarily competent, and keeping more people on the staff than necessary. Some have suggested that with the government involved and shortages of some goods, bribery may be more of an issue.

Sudden devaluation of the dollar With the government trying to take on all kinds of additional responsibilities, it is not clear where all of the additional funding will come from. At some point, faith in the dollar is likely to evaporate.

Thanks for a fine post, Gail. Many questions, indeed.

Who ever would have thought the USA, under a Republican administration, would nationalize private business?

It may or may not be a good idea to do such a thing, but the manner in which it was done suggests a coup d'état rather than some sort of rational plan. Of course, it could just be panicked reaction to events that are spinning out of control -- but again, the timing and the direction the nationalization is taking, and the speed with which consent was manufactured in Congress, in the media, and (almost) in popular opinion suggest careful prior planning, The selection of Goldman Sachs executives to manage this financial wizardry, while not entirely without merit --after all, they are the most successful of the standing troops -- just has an off-odor.

I know nothing, but I talk to a lot of people, from a lot of different backgrounds, every day. And to most of us, this feels like rapid progress to something like the USSR. And we know where that led. I don't see how this can really go anywhere except to 1. A thug state or 2. a full-fledged oligarchy in the style of ancient Rome.

Many people have said this, of course. I just want it out there to see if such considerations are completely off base. Maybe the Government is really doing the best it can under the circumstances. I'm glad I don't have to be making the decisions.

As a conservative (I'm not neccessarily a Republican anymore...) I find what has gone on under the Bush administation very disappointing. Everytime I hear, "we must take drastic action immeadiately," red flags go off in my head. Bush is not acting like a leader and neither is congress. I'm hoping somebody comes forward and leads (it's not looking like Obama or McCain) by telling the American people that they are in control of their own destiny. Financial prudence and knowledge is the responsibility of every American person. A free, capitalist society cannot work if the general population is not somewhat intelligent in their decision making processes. If the American people continue to fail at managing the basic aspects of their lives, we will slide into Socialism. Everybody will be equally miserable.


"telling the American people that they are in control of their own destiny" what's needed is telling the people they are RESPONSIBLE for their own destiny. Unfortunately the nature of democracies is that the people vote for politicians that tell them the good times will continue or get better.

Above, "And to most of us, this feels like rapid progress to something like the USSR."
"we will slide into Socialism. Everybody will be equally miserable."
Why do Americans keep insisting that any sort of collective social action is communism?

Why do Americans keep insisting that any sort of collective social action is communism?

Because their society is screwed in the head. Everywhere else I go there is some kind of public health system. but I talk to my brother in law in Indiana and he thinks it's SOCIALISM!!! And if the health care system goes to gov't we're all on the way to the gulag. He's typical, and he's an idiot. I would think he's a singularity, but I've met his neighbours and they are all of the same view.

It's as sad as it is pathetic, and is one of the reasons I left. I just got sick of the stupidity. There's plenty of stupidity elsewhere, but at least I'm away from that particular variety of wilful ignorance combined with wishful thinking and obdurant adherence to superstition and narrowminded idiocy.

Stuart. I know what you are saying--I live in Indiana where universal health care is socialism but nationalizing Wall Street is not. I guess it comes from listening to Rush Limbaugh, but you would think that even a little bit of common sense would show the fallacy here.

"Fascists promote corporatism, ... which typically allows a significant degree of freedom from state intervention for private interests that are operating well independently or are outside of national interests, but if areas of the economy vital to national interests are operating poorly, or require direction to operate in accordance to national interest, state intervention is utilized."

Well hello, and who is this here here then?

National Heath Care is socialism because and only because it is currently very profitable. Our insurance for self employed under 50's is 14,000 per year. The politicians can talk all they want that $5,000 rebate or what ever. This is a bridge to nowhere.
health insurance is cheap when everybody has it. Thanks to the Hill-Burton act those without get to pay nothing and we get to pay extra via higher and higher insurance premiums.
So we have de-facto national health care. Like everything else there are too few payee's.

Because people have been trained that way. Collective action is the only chance for survival for a species as physically weak as human beings. But the drive for individual survival (which is abetted by the power of hydrocarbon energy) has allowed "the leadership" to proclaim, for a few years that anything other than individual aggrandizement is "wrong." Those people have mis-appropriated a perfectly good word "socialism" and converted it into a punching bag for their own sinister purposes.

Why do Americans keep insisting that any sort of collective social action is commmunism? Because Rush Limbaugh told them so.

Why do they keep listening to that creep? That is a question I would like answered.

I'll tell you what question boggles my mind NeverLNG: Let's forget about banks and stuff like that for a minute and take a commodity like, say, water. How is it possible that collectively, people would allow water to be "owned" by a single person, and then pay money to that person in order to have access to that self-same water? Why would anyone allow water to be controlled by a corporation whose sole purpose is to make a profit? That boggles my mind completely.

I think "the people" don't allow it in the sense that they "vote" for it. Because of a corrupt system, they elect "leaders" who pass laws making common resources (The Columbia River, say) into a commodity that they can buy and sell -- and they (those "leaders") sell the River to the highest bidder-- and the bidders are all working with each other in a rigged auction.

Then the people, who didn't really get the money anyway, have to buy it back.

The system is so well tested and perfected -- English "inclosure laws" were very effective, and it the pirates' techniques have improved greatly since then. Maude Barlow: The Growing Battle for the Right to Water

Don't know where you live, dtbks, but here in the arid west water is a scarce commodity and the rights to it are defended to the death. AFAIK, we can't even collect rainwater in a barrel because that water has already been claimed. Talk about mind-boggling.....

"Why do they keep listening to that creep? That is a question I would like answered."

Because people have lost the will to search for their own answers. There is so much information and misinformation out there making it very difficult to research your own answers. It is much easier to just listen to a so-called "expert" who has culled the data for you and boiled it down into easily digested info bits. This is particulary the case with older folks that are not so comfortable with the internet.

The real problem is that people willing and able to provide honest and true answers would never think of ever doing the sort of self-promoting publicity-seeking stuff the Limbaugh types do in order to hold onto their power bases.

Collective action is the only chance for survival for a species as physically weak as human beings.

Are you sure? How about a crowd collective stampede over the cliff?

For the survival to have some chance, the action has to be:
1. Sane organized by sane people, OR
2. Voluntary so that the sane people can opt out.

I want to opt out from the Privatization plan. Tell me how!

Obviously, voluntary organized collective suicide is deadly for some madmen, but mandated organized collective suidice is deadly even for the sane.

Those people have mis-appropriated a perfectly good word "socialism" and converted it into a punching bag for their own sinister purposes.

No matter what word you like for it, the concept mandatory government stealing wealth redistribution is as destructive as stealing.

"we will slide into Socialism. Everybody will be equally miserable."
Why do Americans keep insisting that any sort of collective social action is communism?

Because by the definition Communism is when such collective social action is forcend upon everyone without individual way to opt out.

Hi Tony (and Suart, et al.)

"Why do Americans keep insisting that any sort of collective social action is communism?"

I tried to resist replying to your rhetorical question, I really did, but since I actually know the answer it seemed dishonest to remain silent.

But first, the disclaimer: I am in no way a conspiracy theorist and have no faith in the efficacy of tin foil hats (although a full scale Farraday Cage might be prudent.... joke). Here's the deal. To live is to conspire. Wherever two or more creatures are gathered in the name of mutual self-interest, there is conspiracy. A football huddle is conspiracy. A closed door Board Meeting is conspiracy. Have I made the point?

Americans keep insisting that 'any sort of collective social action is communism' because dedicated professional propagandists have worked very diligently for many years to make that prejudicial assumption a core belief of as many people as possible.

It's not difficult, just expensive. All ya gotta do is say it often enough from as many sources as you can hire using as many channels of communication as you can afford.

Chief among the conduits for the specific bullshit you asked about were Time/Life Publishing under the direction of Claire Booth Luce and the then U.S. Office of Special Services (later to become CIA) for whom similar patriotic services were performed as part of the defense effort of the Second World War. The company pretty well bracketed the readership spectrum, with TIME mag for the upper-middle, LIFE mag for the mainstream, Readers Digest for the unwashed masses, and My Weekly Reader for innocent tykes in schools across the nation.

(So if reading any of those has ever left you feeling intellectually soiled, now you have a hint about why)

Basically all of this grew out of the coordinated intelligence efforts between England, Canada and the United States starting with the run-up to World War II. After knocking out the Nazi's and Nips by the middle of 1945 they turned their sights to the next target looming on the horizon: Joe Stalin's Russia.

Because the OSS (later CIA) were staffed up originally from the ranks of Industry and the Ivy League the 'flavor' lingered, so anything that did not please these elites that was even remotely similar to Communism got a severe dose of what we gave Hitler and Iron Joe (socialism, trade unions, liberals, etc.)

The non-fiction book "A Man Called Intrepid" , by William Stevenson is an excellent read if that sort of thing interests you, But be forewarned, the book itself is a smoothly presented piece of propaganda, and as such is likely to leave you not nearly as well informed as you will feel it does.

So, to make a long answer too short: we've been brain washed and it weren't no accident.

There is no group of humans more socialist in thinking and behaviour than the superrich. The average human with a net worth exceeding 30 million US has a far more extensive social network and social support than the average person. Most billionaires literally have hundreds of friends that can help them out financially and in other ways-the average person is lucky to have a handful. The rich are socialist because socialism works.

The rich are socialist because socialism works.


May I add, the rich probably do not have problem with socialism, because they do not have problem with stealing. Many of them, benefited from it in the past, some even became rich that way.

And socialism or tax and wealth redistribution sound much nicer than theft<?B>.

And remember, every time you take from some, before you give it to another,something sticks under the fingernails. And the recipients of the leftover benefit may even praise you!

There are many leaders out there. Don't dispair because you see the President (tial Choice) as "The Leader". That's what democracy /was/ trying to alleviate/correct. What other leaders are out there? Well looking at one! definition of leadership, it could be one who is followed. Why are we following those who sell/lead/ us the new big SUV? or the newest fastest computer, or the bigger house? Where are the education and values being taught? TV and other media outlets, maybe. Why do we have a culture where two income families are pretty much a necessity, and teachers are one of the lowest paid professions, along with others that protect and serve? Perhaps a focus on more and better education is the only way for the next ( or its too late for any but the next next) generataion.

There are many leaders out there. Don't dispair because you see the President (tial Choice) as "The Leader". That's what democracy /was/ trying to alleviate/correct. What other leaders are out there? Well looking at one! definition of leadership, it could be one who is followed. Why are we following those who sell/lead/ us the new big SUV? or the newest fastest computer, or the bigger house? Where are the education and values being taught? TV and other media outlets, maybe. Why do we have a culture where two income families are pretty much a necessity, and teachers are one of the lowest paid professions, along with others that protect and serve? Perhaps a focus on more and better education is the only way for the next ( or its too late for any but the next next) generataion.

I think this is all "kicking the can down the road a ways". There is no way in my mind that the government can tax the rest of the economy enough to pay for all of the things it would like to help. The nature of the problem is that there is no way the government can maintain our current standard of living with this approach.

To me, it looks like there is a significant chance of a fast crash at some point down the road, once the solvent portion of the rest of the world decides it is no longer going to fund America's extravagance. After such a crash, one doesn't really know what would be left: Would US government stand in its current form? Would some states form their own governments? Would universal electricity continue? Would there be enough gasoline available to talk about allocation?

I suppose there is also a possibility of a muddle through solution. The government takes over these programs, but sets its goals very low. GM is shrunk to 10% of its previous size, and makes electric bicycles. Resources are allocated to the programs we need most--maintaining food production, keeping electrical service, providing some limited form of transportation. It is hard to see governmental officials heading in this direction, though.


I quite often here this 'financial crash' type scenario where everyone dumps their Dollars but I have to ask if this is reasonable and under what circumstances? It seems to me that the fiat currency based world is so intertwined that to suddenly abandon the dollar would be death to those that did it as well, like a poker game where everyone is all-in but no-one reveals their hands...

So isn't it more likely that we will simply see debt continue to rise and rise 10 Trillion, 20 Trillion, 50 Trillion, perhaps with some Inflation until the numbers are at such dizzying heights that... well, some would say we are already there I guess...


It seems like the interest rate the government will have to pay on bonds will have to go up for anyone to buy the huge quantity that would be necessary. Paying the higher interest rates would become a major strain on the economy.

Or if the current monetary system is working too badly, it would seem like the government (once it has nationalized a huge amount of things), could just change it (with congress's consent). Simply start issuing fiat currency as needed, without a tie to debt. That would likely mean huge inflation, and a big drop relative to other currencies.

Gail -- what do you suppose is actually meant by "nationalizing" a business or an industry? That would actually seem to be shorthand for "take it from whoever claims to own it now, and give it to whoever the Regime favors."

I don't see the average American sharing in any benefits of "ownership" of Freddy, Fanny, AIG or the rest. And what's next? Steel? Oil companies?

At the same time, there seems to be a rush to "privatize" things that really should be in common ownership -- water and highways come to mind.

I boggle.

I think that we are suddenly going to start to run into problems with the things we have recently privatized, and state governments will be called on to take back over the functions that someone else had been paid to do. Of course, state finances are being stretched already, and they really aren't able to borrow. All of these could go together to reduce the level of services we are able to obtain.

If the re-investment of spent monies back into US treasuries is what has kept interest rates low -which appears the case- then a slowdown/crash in US consumer spending would send the thing into reverse. Not only would we see a global recession but this return flow would be seriously curtailed. Mmmm, not good.

Are there any key indicators that would show a reversal of this feedback loop -I have been watching the VIX (all time high) and Baltic Dry Index (falling off a cliff)...


I also get the feeling that the central banks will eventually have to start purchasing government treasuries with new money. Other countries such as China will also inflate (but less) to keep their exchange rate reasonable. I think the recent concerted interest rate cut is part of this 'race to the bottom' for global fiat currencies. Whilst some will fair better than others, non-fiat money will do best of all (once the paper markets are shown to be fraudulently manipulated).

At this point however, the private ownership of precious metals may once again be outlawed, allowing only the elite to monopolise the function it offers as a store of wealth. The rest of us will have to find other ways to hedge against the tide of inflation.

Gail, the government has avoided raising taxes to pay for things for the last few years and as you say it is just not possible to raise taxes to cover all the bills. For years America and others have been living beyond their means and now there are hard times ahead. Imagine if taxes had been raised to cover the Iraq war, just imagine how quickly the adventure would have been over.

Your points above:
IMHO a national grid is required to ensure that electricity can be efficiently transmitted across the nation rather than having individual companies controlling their own regions.

Railroad tracks should be controlled by the government so that long term plans can be undertaken.

Airline industries to smaller cities should not be subsidised, otherwise how long do you think these subsidies should continue, 5, 500 years or until reached by rail?

Auto manufacturers have fought tooth and nail to prevent reasonable CAFE limits to be introduced, have bought and closed down railroads. Let them go bust and someone will buy the assets from the receivers and use them more efficiently.

Housing problems, stop falling prices?? I thought one of the problems has been a house price bubble? Surely lower prices are more affordable and will increase demand to remove the overhang of new houses?

Government to provide support to the new manufacturers? I will be manufacturing pork barrels and bridges to nowhere at low cost for voters, how much can i have?

State and local governments, this is a cash flow problem caused by the freeze of the money markets. Sure government can help out.

Failing banks, now there's a question, hang on just got to get back to work.

To me, it looks like there is a significant chance of a fast crash at some point down the road, once the solvent portion of the rest of the world decides it is no longer going to fund America's extravagance.

I am having a hard time figuring out who exactly is solvent right now or even what solvency means in the current context. With Ireland, Iceland, Germany, etc. guarenteeing all of their bank accounts, it is difficult to think of a solvent country of significant size. China and India perhaps are solvent but how can one be solvent holding onto large numbers of dollars. Maybe this is where we get one world government. Oops, I almost forgot Canada. Canada does not seem to have much exposure. Of course they balance that by having an environmentally collapsing province in Alberta. But damn few people live in Alberta, so why not turn it into the world´s largest toxic waste pit.

I would suggest that a country can potentially be solvent if it has food and water security. Perhaps we should get away from the idea of solvent countries and start thinking about solvent small safehavens.

"once the solvent portion of the rest of the world"
Gail, which portion would that be? :)

I suppose it might be pretty small. It would probably be mostly oil exporters and possibly China. I'm not sure that Russia would be in it.

An awfully lot of counties have joined the club and borrowed like rapidly growing economies would continue forever.

There is a series of posts over at Global Guerrillas about the hollow state, the transition from "nation state" to "market state", and the legitimacy of the state (social contract) of which this is one. That line of thinking has to be included in any consideration of what is "appropriate". The more the market state gives to the fat-catters, the more illegitimate it becomes, because it's the fat-catters that own the "market state".

Nationalizing - if that is the right word - is another solution in the wrong direction. Seems to me these big institutions need to be broken up. Capital requirements for large projects can be met with specifically chartered public interest corporations - like the Blues used to be - and research provided by open source, public interest "systems libraries".

I'd suggest pushing down the scale of production to local levels, where impacts can be seen "within the horizon" and sharing the information,learning and some set of standards. Instead of 3 national banks, maybe 3 community banks within every bioregion (at least). All of them with ownership restricted to those who drink the water in that local community.

cfm in Gray, ME

I'll avoid the general debate over the correctness of nationalizing any industry or institution. Rather I would put forth the most obvious, IMO, result of all such efforts: the shifting of responsibility from the private sector to the public. Some refer to this as socialism. I’m not sure if that is the proper term…I’ll let others debate that issue. To many this is attractive: the public (gov't) can now mandate "fair" policies. In some cases, this may actually be beneficial to the general interest. But this all occurs at a great liability to the American people. A liability I think few appreciate. Many examples but I'll outline the most obvious: Fannie and Freddie. For all practical purposes, about half the mortgages in the US are now the DIRECT responsibility of the American public. Years down the road this might result in a profit or lose. But in the meantime, folks whose homes are reprocessed will have the process conducted by their gov't. But, as this may prove to be politically unacceptable, perhaps the gov't will just rewrite the mortgages on much friendlier terms (as many in DC are currently pushing). Of course, this means tax payers will be absorbing the loses generated by the process. Again, not necessarily a bad thing for the economy. But not a very appetizing approach for all the tax payers who had been making the mortgage payments without gov't assistance.

But forget the past the American people have now inherited. Look forward. American tax payers are now responsible for much of the future of the home construction business upon which the economy is so heavily dependent upon. Perhaps some private sector money may become available but it difficult to imagine very much private investment in a gov’t controlled business. Given all the confusing and conflicting chatter from DC these days I’m not sure where the future housing /mortgage industry is heading? But wherever it going it will be the responsibility and liability of the American public. And I just don’t think most appreciate that.

While some businesses could split their accounts among banks, this becomes difficult if dozens of banks are needed for ordinary transactions.

Oh c'mon, that's just an accounting 'speed bump' for a multi-currency, globalized corporation. Seriously, though, if the corporate giants pursued a cloud bank model (Bank 2.0?), there would be pressure to create an ever-increasing number of banks which, to my lightly-educated mind, is guaranteed to create at least as many problems as it solves.

WOW! so many topics, so little time. Great post.

If the dollar is trying to lose value, but the 'Global Economy' is causing all other currencies to follow our lead, can the dollar really go down that much?

I think the question really should be how much the US currency would drop relative to that of the major exporters of oil and perhaps China. We might do fine relative to other currencies. Of course, the countries on the same level as we are might be having as many problems as we are, struggling to get rid of excess debt, and have relatively little to export.

This article talks about the need to raise the evaluation of Mid-East currencies relative to the rest of the world. The current pegs are causing inflation.

In these countries, inflation pressures would fade once price levels had adjusted upward enough, so long as expectations for future inflation are kept in check.

The IMF said a similar outcome could be achieved through currency revaluation, but argued that this would be complicated. Another solution would be to switch from current dollar pegs to attaching to a broader basket of trade-weighted currencies, the IMF said.

It's possible that you may be forgetting that the Bush administraion has ALREADY played the "currency devaluation" card on international markets, long before this crisis. eg. the Canadian $ has appreciated (depending what day you want to calculate with) over 40% vs. US $ since beginning this admin.

Pretty sure other countries (eg. Canada) aren't willing to allow this to go on any more. It's already killing Cdn export competitiveness. Only bright spot is Cdns generally aren't quite as heavily leveraged.

The problems underlying the various industries you list are varied.

The financial and much of the banking system is insolvent, and unless we are willing to accept Great Depression v2, they need to recapitalized. The good news is that there is a formula for doing this that works pretty well. In a nutshell: nationalize, take equity stake, wipe out shareholders, creditors take a haircut, fire management, rehabilitate, and finally re-privatize. Too bad Paulson isn't doing this 'cause it'll come to it in the end anyway. The other side of the coin is how the problem was created. Lacks and non-existent regulation, information asymmetries, complex derivatives that are essentially can't be priced, the agency problem, perverse incentives ... the list is endless.

In some of the other cases listed, the industries are simply on their way out. Airlines and cars for example. In these cases the invisible handle is trying to clean-up the rubbish in the economy so the capital can be put to more productive use.

Finally, a number of the listed industries where public investment to serve the public good makes sense. Rail and electricity are probably the best examples. Supposing we have the capital available, these investments can make a lot of sense. However, between oil shocks, a massive misallocation of trillions of dollars in to unproductive housing stock, and the capital destruction and deleveraging currently taking place, I don't think it's clear that capital will be available in the foreseeable future.

As far as Nationalizing Oil is concerned.. the supplies if not the companies anyhow, listen to the "DRILL, DRILL, DRILL" citizens. It seems that according to them, the Oil BELONGS to the USA, and should be offered directly to the US Markets. They might die before admitting it, but it sounds like they're practically begging for Nationalizing the US Oil Reserves.


How would you define "nationalizing supplies"? And "nationalizing companies"? I see many offer these concpets but seldom describe the process.


The easiest way to create a national oil company is for the government to buy shares and assets of existing companies.

Petro-Canada was founded after the big price increases in the 1970's. IIRC, the politicians claimed that oil companies were making "windfall profits" which belonged to the voters.

Once the national oil company was set up, they learned in the 1980's that you can have "windfall losses" as well.

By the end of 2004, the company had been completely sold off to private investors.


AFICT, there currently isn't much support in Canada for nationalizing companies. Been there, done that, and it doesn't work.

I don't know that I could define this.. my post sounded more like advocacy than I meant it to. I was just remarking on the two faces of the Nationalist Tendencies in the 'Drill, Baby Drill' community, where that would seem to point them uncharacteristically towards a Nationalized resource.

I don't know if Nationalizing would be a useful option in some way or another.. but it seems realistic that more and more countries will continue to shut out Indy OilCo's and attempt to claim the income for the home team.. or at least for the club captains.

Again, the fine border is in the voluntary nature of the DRILL request.

Forbidding just like mandating Drilling would be socialistic, as if the state would own the oil and had the right to say what shall the company do with it. Despite that the people in the oil company paid market price for the oil field.

Another matter is if the company is allowed to drill or not to drill as they please.

as if the state would own the oil and had the right to say what shall the company do with it.

Actually, that is how it does work. Checkout the history of property rights in English law. In fact, in Canada, there is still in common use the term "Crown Land" to describe any land not specifically owned by individuals or corporations, eg. government land. Also covers mineral rights below 12" on most private land.

Ahh, but I see from that the same is not commonly the case in the US, eg. surface land titles also typically convey underground mineral rights unless specifically excluded.

One of the things many have been saying here from the beginning is that the energy situation would lead to issues of governing common resources, which is a branch off from Hardin's Tragedy of the Commons. The seminal work re: commons governance was written by Elinor Ostrom called Governing the Commons, the findings of which, if I were to sum it up in one sentence, would be this:

The only way to govern the commons is to either a) change the overall set of norms at the local/tribal level to one of good sharing OR b) collectivize the common resource pool.

I have to say, personally I cannot say I that envisioned that all of this would start with the socialization of the economy prior to the socialization of energy. However, in retrospect, it makes sense, because the socialization of the economy provides the access of the public sector into every other sector through capital controls. I would imagine we will see a whole bunch more NOCs, NNGCs, and the like in the near future, even if they are private entities in name only, they will act in concert with national governance institutions.

Here's a good summary of Ostrom's work:

* People are trapped by the Prisoner's Dilemma only if they treat themselves as prisoners by passively accepting the suboptimum strategy the dilemma locks them into, but if they try to work out a contract with the other players, or find the ones most likely to cooperate, or agree on rules for punishing cheaters, or artificially change the incentive ratios - they can create an institution for collective action that benefits them all. This resonates with Peter Kollock's taxonomy of strategies for dealing with social dilemmas - one strategy is to change the rules of the game.

* Changing the rules of the game to turn zero-sum games into non-zero-sum games may be one way to describe the arc of civilization for the past 8000 years: using symbolic media and social inventions, people have created institutions for collective action since the emergence of agriculture spurred the invention of writing. But for the most part, we've overcome obstacles and built these institutions blindly, without any systematic knowledge about how the game works. Ostrom takes an empirical approach: By examining legal records and other public documents, is it possible to determine whether every population overconsumes and under-provisions all common pool resource? She found that in many different cultures all over the world, some groups would find ways to overcome the obstacles that defeated others - by creating contracts, agreements, incentives, constitutions, signals, media to enable cooperation for mutual benefit.

* Social dilemmas of multiple dimensions are obstacles on the path to creating institutions for collective action; these dilemmas must be overcome if institutions are to succeed or exist at all. Lack of information about the system can be an obstacle to agreement among the individuals who make up the system.Systemic information about salinization of wells was an obstacle to water-sharing agreements in California; individual water-users knew whether their wells were pumping salt, but none of them had compiled the information to see the overall pattern in the watershed, and no individual was willing to pay the price of gathering it. In this case, the US Geographic Survey had the data, thus overcoming this obstacle. Another obstacle, free-riding, creates the second order social dilemma concerning who will bear the cost of policing the rules once they are agreed upon. So although the overall formula is simple - social dilemmas can be solved through institutions for collective action that are built by overcoming known obstacles - in practice, each group that struggles to build an institution works under the handicap of being largely unaware of knowledge about how such institutions succeed and fail.

* In comparing the communities, Ostrom found that groups that are able to organize and govern their behavior successfully are marked by the some basic design principles:
o Group boundaries are clearly defined.
o Rules governing the use of collective goods are well matched to local needs and conditions.
o Most individuals affected by these rules can participate in modifying the rules.
o The rights of community members to devise their own rules is respected by external authorities.
o A system for monitoring member's behavior exists; the community members themselves undertake this monitoring.
o A graduated system of sanctions is used.
o Community members have access to low-cost conflict resolution mechanisms.
o For CPRs that are parts of larger systems: appropriation, provision, monitoring, enforcement, conflict resolution, and governance activities are organized in multiple layers of nested enterprises.


The commons is a general term for shared resources in which each stakeholder has an equal interest. Studies on the commons include the information commons with issues about public knowledge, the public domain, open science, and the free exchange of ideas -- all issues at the core of a direct democracy.

Common-pool resources (CPRs) are natural or human-made resources where one person's use subtracts from another's use and where it is often necessary, but difficult and costly, to exclude other users outside the group from using the resource.. The majority of the CPR research to date has been in the areas of fisheries, forests, grazing systems, wildlife, water resources, irrigation systems, agriculture, land tenure and use, social organization, theory (social dilemmas, game theory, experimental economics, etc.), and global commons (climate change, air pollution, transboundary disputes, etc.), but CPR's can also include the broadcast spectrum.

Neither market-based democracy, nor socialism, nor any other ism is likely to be the answer to how to form a rational governance system. Starting back in July (16th) I began writing about a completely new framework for understanding governance. It recognizes that society is a whole system and markets, regulation, laws, and ordinary government(s) constitute a hierarchical control structure. Operational controls work in the markets and within organizations, coordination controls (logistical for internal optimization and tactical for dealing with the environment) are a function of governmental agencies, courts, etc. Strategic control should provide the long-term vision of where, as a society in a finite world, we should be going. We have certainly been missing the strategic vision of late. I call this governance framework Sapient Governance to recognize it is the wisdom of nature that provides a model for how governance of complex dynamic systems can be achieved.

Start reading here, scroll down to the July 16 blog for a starting explanation. Then if you find it interesting follow the crumbs upward through July and on into August. I've also been blogging about the implications of adopting a sapient form of governance, both hurdles to get over and results that might be expected. This will continue in up-coming blogs.

When the dust settles, perhaps whoever is left standing will consider something like this.


We can see this problem currently in the NNGCs like Exxon, Shell and Mobil. The community members down to the last pensioner ownint its share are forced to suboptimal strategies.

Early they realized that Energy is scarce and important and for their last pennies collectively bought the oil field, sometimes even mortgaging their homes. Why this community cannot be successful?

- Froup boundaries are not clearly defined. Goverment thinks that it is part of the group and owns rights to tell them what to do with the offshore oil.
- Local conditions are such that irrational buyers often pay more wor wind enerty than for cheaper oil.
- Most individuals cannot change failed government policies
- Because of ownershop of critical resource, they are envied to by less successful individuals. They canot affect rules such as windfall profit tax.
- System of monitoring inside is working, but outsiders are riddled with suspicions.

That's why I never became a member or shareholder of any NNGCs like those big oil companies, because I know that human avarice and jealousy will eventually be unsurmountable obstacle to their prosperity.

Government as poor business manager

Having worked for many years for private and public entities, I just cannot fathom why anyone would believe this. I have worked for corporations that are legendary for their spectacular inefficiencies. Scott Adams has made an entire career out of lampooning them.

There's good and bad everywhere, I think. The so-called inefficiency of government seems more like a political ploy than anything else.

Agreed. The myth of the efficiency of the free market capitalist economy is so pervasive, even subjecting the myth to cold, hard data does nothing to reduce its power. I keep thinking of the mythical efficiency of large scale corporate agriculture. It's simply a lie, but no amount of saying it or trotting out scientific papers that show that small-scale peasant agriculture is more efficient and productive makes any difference at all.

I can see that you (nor these ‘scientists’) have never been really involved with a primitive farm. I knew many old farmers in East Texas who told it like it was. As fuel approaches $50/gal and scarce at that, then looking up a mule’s ass for 8 hour half days may just become practical but certainly not by choice. A young man could clear 40 acres and farm it but many died, the rest grew old fast and died young. A lot of that land went to feed the mules. The peasant farm required one person in four (or more) to be involved with food/fiber production while now it is like 1 in several 100 ride around in air conditioned comfort to feed the world. I rode with a farmer in North Dakota who farmed 1800 acres by himself. He was fertilizing with GPS a section of land that would produce more beans than you could imagine. No thanks to peasant farms until necessary.

I find your comments questionable.

DO you have personal , and I mean actually working and living on a farm back when draft animals were used? If so then state your REAL personal experiences otherwise..........

this is just opinion and not based on reality.

It is just more nonsense I suspect from reading trash on the internet and posting your summation here.

There are actual members here who do use work animals. I have posted myself on my own experiences in this area many many times.

And I have also posted my experiences with setting up Precison Ag via GPS devices. Ordered them, installed them, ran farm programs(Farm Works for one)..and repaired them. I have also , as stated above lived and worked in my early years,,1938-1949 on a real working farm where we used wood to heat and cook. Kerosene lamps for light. Chopped and sawed all our own wood. Used three mules which I drove many many times.

Your views might be true in Okie land perhaps or the Ozarks on dirt poor farms but it is certainly not true for fertile productive land and soil. Such as Illinois,Indiana,Kentucky,Missouri and many other states in the upper south and midwest.

And we never ever used the term "peasant farm"....sounds european to me.


Not to start an argument or anything, but I actually have worked what many would call a primitive farm. Strictly muscle driven. No powered equipment or industrial fertilizers or pesticides. On the upside we had 40 acres of virgin river-bottom land and a perfect climate (Bahia, Brazil, 1969) for year round cropping of an incredible array of fruit, vegetables, beans and onions. Six adults worked a steady but not back breaking eight hour day, six day week. We made good money, had a great time and ate like kings.

The next year our 'money partners' (retired midwestern farmers) came down and poured all the money into an attempt at mechanized methods on the higher ground to raise corn, wheat and potatoes. What a bomb. The whole project went bust in six months. Too warm for spuds, grasshoppers mowed the corn as fast as it came out of the ground, and every aspect of the machinery cost two to three times what they thought it would, not to mention the fact that with only one exception these 'successful farmers' did not know jack about actually growing things. Take away their tractors and chemicals and they were lost in the woods.

The local guys, on the other hand, had nothing but hand tools, seeds, and a humble attitude. They laughed a lot while they worked, and showed me how to be a farmer..

I've also spent some time around East Texas (although much more time near the West edge of the panhandle in Clayton, New Mexico). Long enough to know that it never should have been row-cropped in the first place. Hardpan silty soil, a climate that makes Hell look like a health spa and basically as dry as a popcorn fart. No wonder homesteaders either fled or died young. Hispanics and Indians lived there forever with no problem, and Anglos turned it all into a dust bowl inside of twenty years.

I've seen those 1800 acre outfits you mention. That's not one guy doing all that farming, he's just the only one that you actually lay eyes on. Behind him is a global behemoth of backup industries. It's called chemical farming, and it's an extremely fragile system utterly dependent upon myriad parts such as genetically modified seeds, specific weed killers, fertilizers, and hugely expensive fuel guzzling equipment. The nutritional value of the crops are from 15% to 40% reduced from historic levels, and the health effects of genetically tweaked foods and the chemical stews used to force them out of decimated sterile soils are just recently beginning to be realized. Certainly we have a greater proportion of fat and sickly people than we used to.

So smile when you say primitive. Arrogance and disdain are the false shelter of ignorance; humility the respectful wonder of those who have started to learn.

I grew up on a farm prior to mechanization and electrification also. My experience. The truth lies somewhere half way between the previous two.

Agriculture v. Agribusiness.

There are relatively large communities in the US that use traditional methods of agriculture, these are the Mennonite and Amish farmers in Pennsylvania, Ohio and Indiana. They plow/cultivate with animal power, grow mixed crops along with livestock, utilize the manure as natural fertilizer, do little or no irrigation (low water consumption) and use no chemicals. Many of these farms have been productive for decades and are as productive as their neighbors' conventional farms. A difference is the Mennonite farmers have hand labor that is less available to conventional farmers, but their costs in general are much lower.

I am not a farmer (I did start a nursery that didn't make any money) but the idea is to farm for a long time and then pass your farm to your children. Agribusiness is about money. The relentless squeeze between costs and income make conventional farming a razor- balancing proposition that has little to do with culture.

Examining Mennonite farming methods would be a good place to start for finding both techniques and general approach to future US agriculture. The Mennonites don't start with the attitude that money has to be wrung out of the land by force. Their approach is along the land is a gift from God and the farmer gives thanks for this blessing by farming.

The next Administration should hire a Mennonite Secretary of Agriculture. Usually the Secretary is from the food processing industry. Their mandate is to keep the pipeline of subsidies open.

The difference is that usually the inefficient corporations are eventually killed off or change their behavior. The inefficient government just continues.

One thing I thought about mentioning but didn't is the high rates of interest assumed in pension plan funding. I am not sure exactly what pension plans are assuming now. A few years ago, a typical rate of return assumption for a 50% / 50% mix of stocks and bonds was 9% per year. A few companies were even assuming 10%. Companies would increase the portion of their investments in the stock market because this allowed them to justify a higher average rate of return.

My work has been on the "casualty" side of actuarial work, and it is the actuaries working on the "pension" side who have been making these rate of return assumptions. When some of us on the casualty side would see these assumptions, we would shake our heads. The assumptions were fully disclosed, and I am sure the management of the funds "bought off" on the assumptions. (Most casualty insurance programs use bonds for funding, and the interest rate assumptions are based on average bond yields.)

If you are not aware, the higher the rate of return assumption used by the pension funds, the lower the annual contributions. Thus, management of pension funds would "push" for as high a rate of return assumption as possible. The reason there have been so many cut backs in pension programs in recent years is because it became more and more clear that these high rate of return assumptions couldn't be depended upon, and pension funds had to start increasing their contributions.

The first thing to clear up is the identification of nationalization with socialism. Capitalist govts have never hesitated to nationalize losses. And socialist govts have not always nationalized everything -- e.g. Venezuela.

The key issue is in whose interests things are done. Our problem right now is that the foxes are guarding the coop. Interventions are not for the sake of the common good, but to selectively rescue and/or enrich various factions of the elite, who are at war.

A gov't that was concerned about the common good, not in the hip pocket of elite factions, and cognizant of peak energy and its implications would certainly not hesitate to nationalize the commanding heights of the economy, including financial institutions, it would immediately implement a far steeper progressive income tax schedule, a steeply progressive inheritance tax, and possibly even an asset tax. The schedule would be such that perhaps the bottom third would pay no taxes at all. The military would be drastically downsized to say a budget equal the size of Russia's or China's (the US military budget is currently over half the world's!). The 700 odd bases around the world would close, the troops would be brought home today, some discharged, others recruited to the rebuilding I will describe. In the process, disarmament treaties with the rest of the world would be negotiated.

The domestic rebuilding program would center around rebuilding dense towns that are near agriculture and are not dependent on cars, nor even have them. Agriculture and small industry would provide employment in these towns and would be either privately owned or cooperative. Clearly this would have to be done incrementally. The outer suburbs are becoming/will become energetically non-viable, and there has to be a trial-and-error approach to contracting to density with agriculture and local industry.

The key aim of all this is that everyone be able to survive: eat, have a roof, medical care, etc and in general have the extreme stress taken out of their lives. "Zero misery" is a slogan they have in Venezuela that I like.

My daughter lives on a commune in W Va. Their quality of life is, in many ways, as good as that of any suburbanite, but per person they consume a teeny fraction of the resources, and are not devastating the environment. It's absolutely possible to live well with a far smaller resource and ecological footprint.

A peoples govt should be pragmatic about nationalization. There is no reason to nationalize businesses that are working and there is no reason even not to outsource gov't functions if and where that works, and govt doesn't outsource supervision and oversight. The key thing is to keep the foxes out of the hen house, i.e. the govt has to be clean, not beholden to and manned by billionaires. Nationalization alone doesn't solve anything.

Of course, this isn't in the cards right now. Nor could such a gov't get anywhere as of yet -- too many of us are still more concerned about saving our assets than saving our asses. But down the road, something like all this has to be put on the table if we are to survive.

I VERY reluctantly favor nationalization because bank/financial managements have shown they can't be trusted to do their jobs.
It's outrageous that banks continue to be reluctant to lend and that assets are not transparent.

At the risk of losing all credibility, I would mention that under Hitler, who did not nationalize the banks, bankers and business financiers were brought to heal by the threat of ending up in Dachau. In fact, they became instumental in the Nazi (Mefo) bond scam.

The US government continues to entice the spoiled financial juvenile delinquents with treats and letting them keep their golden parachutes or in the case of the bankrupt AIG throw wild parties for management to celebrate their bankruptcies.
It seems rather imprudent for the government give out money until new management (practices) have been put in place.

I remember that during the war the Gestapo used to publically hang deserters to 'raise morale'.

Being infinitely more humane than Adolf, the alternative is for the US taxpayer to literally take over Wall Street and the banks and implement new management from the top.

I wish(sigh) we could pass ex-post facto laws on the unregulated hooligans of Wall Street but it's against the Constitution(which is why we are screwed). The scheme of the deregulator theorists hinges on this fact.

Still, Congress might in their wisdom make the life of financial executives a living hell with hearings and the IRS might be apply some pain and of course, we NEED to unleash the lawyers with their class action suits.

Right now most people expect hyperinflation(helicopter money) will be the next step of rescue.

What we need are firing squads.

To 'raise morale'.

Wall Street was/is infected by a culture of fraud and corruption-now that same culture is controlling an important part of the USA federal government-the Treasury department. As the funding for various Treasury department schemes and scams grows, so will the power (already immense) of these grifters. Nationalization won't ever be effective without a minimum level of integrity or oversight.

What we need are firing squads.

That's the one thing we don't need. Even though I'm an old Marxist, even though I'm one of those who believe 9-11 was an inside job, even though I believe the whole country is being stolen, I don't believe in firing squads. The people doing this stuff are but agents of a system that is entirely out of control. The focus needs to be on bringing it back under control, on survival, not on revenge.

The truth needs to be brought out, everything opened up, and the people who are now in charge removed from power, but I do not favor anything more than comfortable retirement for them if they would but get out of the way. The Russian Revolution made great mistakes in executing the Czar and family, indiscriminately expropriating and stuff like that. Every effort should be made, every concession necessary made in order to have a peaceable change of course, to have the monied elite let go of the reins of power, or at least one rein. There have to be many members of that class who realize how all this might end once blood starts flowing. No, there should not be any pretext for violent class war coming from the bottom. The demand needs to be survival for everyone, food, a roof, basic medical care, a job, a community. It's not going to possible for people to continue living as they have. But comfortable survival for everyone is quite practical.

But of course the junkies in charge will in desperation incite hatred and violence at a time when we need vigorous, even heated debate, but zero violence, zero hate. The worst thing is to give in to that kind of rhetoric and mindset, and give them pretext for what they want to do anyway.

Agreed on the firing squad, but I dream of waking up to the sound of ex-bankers singing in the chain gang laying rail down the street.

That got a smile.

My hope was that the Hague would offer our highest paygrade criminals an extremely fair trial (which ought to be shocking enough..) followed by a sentence of working janitorial at a Big Box store and surviving on the wages.

"Always tell the truth. This will gratify some people and astonish the rest." - Mark Twain

The people doing this stuff are but agents of a system that is entirely out of control.

Right. Dare I say it, it's easy to villify wall street and the bankers but I bet a lot of them pretty nice guys and gals who you'd probably be fairly tolerant of if you met them in other circumstances. Just to make a point, you could even describe the actions of the banks as being altruistic: they were loaning out large sums of money for people to buy homes that were vastly overpriced who otherwise wouldn't of been able to afford them. Not their fault that those people who were taking that loan couldn't pay the debt back. (The terms of those loans were sometimes pretty severe with regards to interest and the drop in housing prices the last couple of years is what started this whole ball rolling).

For entirely other reasons you should beware revolutions: they tend to eat their children. During the french revolution, the communist one in russia and the civil war in england, the ones who finished the war at the end and took power were not the ones started it.

For entirely other reasons you should beware revolutions: they tend to eat their children.

I think we need a revolution, but it needs to be non-violent, and non-vengeful. There should be lots of arguing and debates. Things should not be crammed down peoples' throats -- they need to be convinced, given all the information and all sides of debates. There was a change in power in the SU, a collapse of empire even, the outcome not entirely to my liking, but I liked that it was peaceful and that there was a truly wide-open debate that preceded it. In Latin America there have been several peaceful revolutions in recent years, with the opposition still live and kicking. I don't think revolutions need be violent, and they are certainly not the better for it. Even Fidel has been advising Latin revolutionaries not to follow in his steps (e.g. Morales), but rather to focus on winning at the polls. The violence has (mostly) come from the North.

But we do need a revolution, a change in power -- we need it for survival.

The stuff being nationalized is the junk that nobody wants.

I'm in favour of nationalization, but I'd rather see profitable outfits such as electric utilities and oil companies nationalized than negative-value junk such as insolvent banks.

My preference for most of the instutions on your list (and quite a few more I could think of) is more along the lines of a cooperative "third way". For most of these, ownership could be in the hands of a board of trustees elected directly by the public. This would get them out of the hands of both the government and powerful private interests.

Free market ideology makes much of the fact that the "dollar vote" of consumers is an elegant feedback system to optimize markets. There is some truth to that, at least when pure private goods are concerned and there are no externalities or other market failures involved. In theory, real votes cast in the political sector should serve as an equally effective feedback system in the public sector, keeping government on track. In practice, we all know that reality seldom matches up very well with theory.

What characterized most of the institutions on Gail's list is that they deal neither in pure private goods nor in pure public goods, but rather in something in-between: toll goods. Toll goods share some charactistics of public goods and some of private goods. When privatized and run purely as a private enterprise, they might be made profitable, and thus economically "efficient", but they inevitably fail to fully and adequately serve legitimate public interests. On the other hand, nationalized, socialist-style management can be very responsive to public interests, but tends to eventually become economically inefficient and a net drain on the larger economy. Only by incorporating the twin feedback systems of dollar votes and political votes can responsiveness to the public interest be balanced with economic efficiency.

Thus, to implement this theory:

-I would merge Fannie, Fredie, and also Ginny Mae and the smaller home loan boards into a single entity, governed by a board of trustees elected directly by the people. (This is an important point: it is only by DIRECTLY electing the trustees that effective political feedback is built into the system. Forget about appointed trustees - that only creates a political football/milk cow.)

- Ditto with the Federal Reserve System, with the FDIC, and with the PBGC. Each would have its own directly elected board of trustees.

- We already have banking entities that fit my model - they are called credit unions. Maybe what we need to do is to establish a pathway that will enable more banks to re-invent themselves as credit unions. By the way, there could also be considerable consolidation at the community level. If the credit union is owned by the depositors, who are identical with the public, then why is there a need for multiple, competing credit unions?

- We also have insurance companies that fit my model - they are organized as mutual insurance companies. Only a few of them actually let the policyholders actually vote for the board, though, and this would have to change. Again, a pathway could be established for the stock companies to convert to mutuals. Once again, if the insurers are owned by the policyholders, who is really being "protected" by having a multiplicity of competing insurance companies. Here, too, there could be a lot of consolidation.

-Oil & Gas: The actual hydrocarbons in the ground are something different - those are actually common pool goods. In my opinion, one of the best approaches is Alaska's. These resources are viewed as being assets of the state and its people; prospects are leased in exchange for payments which go into Alaska's Permanent Fund, and from there are partially distributed to all citizens. Something along these lines is a good model that could and should be used for all common-pool goods, including all mineral deposits, fisheries, electromagnetic spectrum, etc.

As for oil & gas refining, distribution and marketing, this could also be set up as a toll good provider under the governance of a board of trustees directly elected by the public. Once again, if this is done, then there could be considerable consolidation within the industry.

-Electric Utilities (and all other utilities): All utilities are classic toll goods, and should all be reorganized as suggested above. A few people are lucky enough right now to be serviced by co-op electric or telephone systems, and these work well to the benefit of those they service. We should all be so lucky.

-Railroads (intra- and inter- urban): These are another classic toll good, and should likewise be reorganized as per above. We might actually start make some real progress toward Alan Drake's EOT concept if all rail systems were owned and operated directly by the public.

-Airlines (and airports): These also should be considered toll goods. A complicating factor is the prospect that the airline industry will have to contract substantially as fuel costs rise. Converting them to public owned and operated cooperatives while they are still IN operation might be the best way to assure that the contraction is managed in a manner that assures that at least some essential level of service is sustained.

-Auto Manufacturers: BUZZ! Nope, automobiles are pure private goods, as is the manufacture thereof. The best way to assure that there continues to be some minimal domestic automotive manufacturing capacity is for federal, state, and local governments, utilities, and other large institutions like universities to go in together on large-scale, multi-year pooled procurement contracts for their motor pool requirements. This will set a financial floor under one or more auto manufacturers, and will also have the benefit of exerting considerable influence over the auto makers when it comes to things like fuel efficiency and development of alternative fuel systems.

-Housing: We already have condominiums, cooperatives, and cohousing communities that fit my model. Perhaps a pathway could be provided which would facilitate the conversion of more multi-family buildings, and even entire neighborhoods of single family housing, into one of these cooperative models. For the most part, though, the single family detached house is a classic pure private good.

Doing anything close to all of the above would require a massive restructuring of the US economy. Please note however, that it is not the same thing as state socialism. We are not talking here about the government actually owning and operating any of these enterprises (except possibly briefly to nationalize them and then turn them over to directly elected boards of trustees). I dobt very much that I will live to see any of this, but remain convinced that something along these lines would be our best way forward.


With regards to oil/NG mineral rights, would you have all private mineral rights confiscated from their owners or are you talking about the gov't buying them? Mineral rights under Federal lands already collect lease bonuses and royalties just as the Alaska system you describe. Virtually all other mineral rights are owned by individual citizens.

And are you talking about mineral rights that aren't currently leased and being produced by the oil industry? If the produciong fields are taken would they also be expropriated w/o payment? If so would you not be concerned about the trillions of dollars lost by retirement funds (teachers, police, union workers, etc) who are the majority owners of most of the oil industry?

And finally, if all minerals right were owned by the gov't I ssume you have have the gov't invest the 100's of billions of $'s to develop them. Where would the gov't get that money?

I am completely opposed to theft of any type. Of course the owners of nationalized/expropriated assets should get fair compensation. I would anticipate that the government would issue bonds to finance the aquisition, and then the elected board of trustees would pay the government for its assets buy issuing bonds to the government, effectively offsetting the government bonds issued for the initial acquisition. The toll good would have to be operated in a manner which would generate sufficient surpluses to cover the debt service until it was liquidated.

And finally, if all minerals right were owned by the gov't I ssume you have have the gov't invest the 100's of billions of $'s to develop them. Where would the gov't get that money?

The resources wouldn't be owned by the government, but by a board of trustees. Presumably they would just lease out rights on various parcels, probably by auction. Developers will presumably only bid a price that makes sense given the expected value of the resource and the projected cost of development. This part of it isn't really all that different than what is done now in many cases.


Thanks for the clarification. There are aspects that seem inviting. But have you considered the magnitude of the effort? For the gov't to pay for all producing oil/NG assets and all privately owned mineral rights would cost many trillions of dollars. Additional, perhaps I missed a point: if the oil companies are essentially eliminated by their assets being purchased by the gov't who would be leasing and drilling the mineral rights as you suggest. I assumed the gov’t or its surrogate would be doing all the drilling.

I do think I get your point. But effectively are you not just creating one giant oil company which will be required to provide an adequate return to it's investors...the US tax payers? I wouldn’t be surprised if many of the boards of the major oils would be in favor of your plan as long as the shareholders received fair market value. These companies are slowly dissolving with virtually no hope of replacing their reserve base as we approach PO. Additionally, do you also envision the millions of workers now employed in the oil industry becoming gov’t employees?

I do appreciate your effort to design such a replacement program even though I don’t think the end result would produce a positive outcome. As poor as the free enterprise system can miss the mark at times I’m even less confident of a single gov’t controlled entity doing as well. It may not be a direct comparison but it’s started to sound a bit like the Fannie Mae of the oil industry…and that’s makes me more than a little nervous.

The cost of cooperativizing (to coin a word) would ultimately be paid by the cooperatives themselves, and thus passed on to their customer base. The debt service payments would probably not differ all that much from the return on capital that private corporations are having to pay out now. The role of the government would simply be to facilitate by initially fronting the money for the nationalization, but this would then be immediately be offset by a debt of the cooperative to be paid off. The liability and asset would net to zero on the government's books.

As for the oil companies, I would envision three entities in the oil industry:

1) A public trust that would hold title on all petroleum/natural gas reservoirs and would lease these out by auction, with the revenues going into a Permanent Fund for distribution to the citizenry.

2) A bunch of different exploration & development companies, some quite large perhaps, some very small wildcats, all private enterprises. This is as it is now, except that the larger operations are subsidiaries of large oil companies. It is appropriate that these be private sector, because this part of the business is very risky and best done on an entrepreneurial basis.

3) One or more (possibly regional or maybe even one per state) refining, distribution, and marketing companies operated as a public trust per my comments above. This part of the business is most like a public utility, and thus most appropriate for cooperativization. Those people employed in this segment of the business would not become government employees, but rather employees in these public trusts, under the management of the elected boards of trustees. There might be some job losses through consolidation; it is not as if that hasn't been going on anyway.

As for the existing large oil companies, some of them are increasingly moving to a liquidation mode anyway. This would just speed up the process, and clear the playing field for those that are really good at exploration & development and want to stay in that game.

Thanks for your analysis! You provide some good insights.

...governed by a board of trustees elected directly by the people.

I like the organizational design, but I fret about the fact that people don't know how to vote for politicians. How will they know how to vote for board members? Then there is always the point about hanging chad!

Actually, the board of trustee elections would be quite different than anything we are used to now. Our elections at present are all multiple-issue affairs. You might prefer candidate X on issues A, B, C, and D, while you might prefer candidate Y on issues E, F, G, and H, they both might agree on I and J, and you might like neither on K, L, M and N. This effectively negates any feedback value that voting provides.

In contrast, all board of trustee elections would be single issue affairs, or at most focus on two issues: affordability of service vs. quality and extent of service. Voting would have a very clear feedback effect. Since these elections would be more clear cut, and because most voters could see that the outcomes will directly impact them, I would expect considerably hightened voter interest and participation.

I see the poor voter turnout for school boards as a big problem with your plan. Something as important as the education of the next generation is met with apathy and that same apathy would be directed at all these national boards you have suggested. Those with special interests in the board members decisions would dominate the selection process through simple apathy. It all comes down to how these campaigns are financed. We should simply pick board members by lottery. Just like we do for juries.

Part of it is because school systems have gotten much too large. If each individual school was governed by its own board elected by the parents (with maybe a position or two reserved for non-parental neighborhood residents/taxpayers), you would probably see more interest.

Starting out this thread assuming that nationalization and subsidizing are the same thing only leads to mad confusion. In nationalization, the state takes over and runs industries. The profits of those industries, after appropriate subtractions, are then used the same as taxes.
In subsidization, the state gives (or sometimes loans) money, property, etc. to private businesses, supposedly for some common good. Like the many subsidies IBM has received here in the Hudson Valley. Does that mean that IBM was "nationalized"? If a bankruptcy court takes over a failing business temporarily to keep it in business, is that "nationalization"? What about the government's contracts with Blackwater? Has Blackwater been nationalized?
The capitalists wet dream is to get the state (meaning the taxpayers) to take over a failing business, pump taxpayers' money into it to make it profitable again, and then to give it back to private business for pennies on the dollar. They have sure done a good job of brainwashing Americans that that state capitalism (with the corporations running the state is the way it should be. But I'm old enough to remember that that is what fascism was.
As for the claim that private business can always do things better than the government, remember that here in the U.S. the government is run by Big Business, and they deliberately mismanage and sabotage public activities such as education and Social Security disability in order to convince people to turn them over to private business for private profit.

Nationalize here, nationalize now!

-- Bumper sticker

This sounds like Jerome's Dialy Kos post, Nationalisation is the solution.

The Federal Reserve is not a part of our government. It is a private central bank. (Which just happens to be owned by those who would profit from a bailout of the financial sector.) So I dont see how you can include the Fed's actions as part of a nationalization strategy! If you want to talk about nationalization, start with the nationalization of the Federal Reserve. All Fed assets should immediately be seized, since it is an unconstitutional criminal organization and a cancer on the nation.

By loaning directly to corporations, the Fed has just stepped up their level of criminal activity. They should be immediately charged with criminal conspiracy to defraud the people of the United States. Even if they succeed at averting a deflationary depression, the new bubble they will create will rob the American people of all their assets and purchasing power. There is NO way they will ever avert a depression without overshooting the mark on inflation by about 10X. They could drive oil to $500 a barrel with the wreckless actions they are taking. It is a most dangerous game they are playing with our money supply, and they have no legal right to be doing it in the first place.

OTOH when you own the government there is no such thing as legal or illegal in regards to your activities. Neither Presidential candidate even pretends to be anything but a puppet.

Quite correct.

Remember, evrything that German Nazi Socialist did was legal inside Germany.

Quite correct about the puppet. They actually race who will show up to be a more obedient puppet. Just they never say, whose puppet are they.

A very timely post, Gail, and the comments are good too.

If the financial crisis continues to worsen, or if it comes close to some of the gloomy predictions at TOD, then the pace of political change will quicken.

It's always struck me as strange that predictions about the future (financial collapse, petrocollapse, lower standards of living) mostly seemed to assume that the political situation would remain the same.

If history is any guide, we should expect rapid shifts in politics. At the very least, a return to New Deal policies. Perhaps a more leftward shift to social-democrat and Marxist politics on the one hand, and an authoritarian corporate-state (~ fascism) on the other. Or perhaps confused populism and uncoordinated discontent.

For sure, there will be a re-discovery of Keynes and Marx, whose popularity soars in times like those to come.

Other countries will follow similar trajectories. Even now, while the attention of Americans has been focused elsewhere, the political complexion of Latin America has changed completely (to mildly left), and Nepal has just voted in a Maoist prime minister.

At a certain point events will take over and it will feel like we're being carried down the rapids. Hopefully we can do a little intelligent steering to avoid the rocks and waterfalls.

Bart Anderson
Energy Bulletin

Thanks for your helpful comments.

Regarding the political future being like the past, I don't think I've made that assumption. You may remember by post from about a year ago Economic Impact of Peak Oil Part 3: What's Ahead?

Hi Gail,

You're right. I can see that you are looking for political changes in the future.

It may be that those of us who are older are more attuned to the possibilities, since in our lifetimes we saw how quickly things can change. For example, it's hard to convey how drastically the United States changed between the years 1966 and 1973. I went into those years as a Teen-Age Republican and came out a student protestor.

We heard from our parents about the Depression years, and the shift from the exuberant 1920s to the radical 1930s. Woe to any of us grandchildren if we wasted food or money in front of my grandmother.

The last 30 years lulled us into thinking that we had reached "The End of History." Suddenly it seems as if our attitudes and assumptions are up in the air. Doesn't it feel as if we are all stunned, not quite believing it as companies go bankrupt and stockmarkets drop?


Long time overdue de-lurk.

I tended to not post here for so long because many folks here say the right things so much better than I can. This subject changes that.

What most people do not realize is that the Fed is as Federal as Federal Express. It is not a government agency. It is a private bank created by people with names like Rothschild, Morgan, Warburg and Rockefeller with the license to print money out of thin air and lend it to the government at interest. Your income taxes pay the interest - the IRS was created at the same time as the Fed.

With their presses rolling this _private_ bank is snapping up US private assets on the cheap. This is not nationalization, this is a corporate takeover funded by a sleeping public. You can call it a huge theft with the government aiding and abetting the crime.

Ergo, this is not communism, this is corporate socialism or just plain corporatism.


You should stress, that it is U.S. govermnemt which eagerly takes the fiat money and distributes it as they please, giving themsemves more financial power over people's lives. So it is Government is snapping US private assets on the cheap. This time it got 80% of AIC for mere $83 billion and now they control the first US Government run bank.

In return, they promise that their subjects - people in ever shrinking non-governmental sector will pay the interest (and some naive think, also principal) through their taxes.

You're right, in fact we could call it a Fed funded government takeover.

I said corporatism because corporatism, aka fascism, is the union of big government and big corporate power bases. This is eerily sliding into that slot.


with the license to print money out of thin air and lend it to the government at interest.

Half agree and half disagree with that. (But don't let that discourage you from speaking out more.)

You're right. Government does print money out of thin air.

So do you. So do I.
We all manufacture money out of thin air.

Frankly, there is nothing wrong with that.
You'd have to be a brainwashed maroon not to understand that money is printed up out of thin air. After all, there was zero money when the dinosaurs walked the Earth. Where did all the money come from? Simple. It came from us. We made the whole thing up.

Now you may challenge me when I claim you are responsible for printing money out of thin air.
But it's true.
Say you won't get paid by your boss until next Friday.
Your gas tank is empty and your bank account is empty.
Nonetheless, you pull up to a gas station pump, whip out the trusty plastic card, insert it into the pump and wallah you have just created money out of thin air.

Nothing wrong with that as long as you can keep your "promise" to remunerate your creditor with the amount promised plus interest. The system collapses when more and more people can't keep their promise (make good on their IOU's, even if they intended to).

Oh. So what part do I disagree about? The Fed doesn't lend money to the government. Treasury note purchasers do. The Fed lends money (at prime rate) to banks and they lend to citizens at above prime, which is how they make money ... as long as the people can pay back. Bank collapse happens when the people can no longer pay back.

I also don't think the bailout/handout has anything to do with socialism at all. It's more the way a corporate state steps in to rescue the private sector, by handing out the taxpayers money.

But then the 'free market' was always a myth, based on equal parts propaganda designed to obscure reality, and collosal ignorance of how the economy functioned minus the political rhetoric.

Now, as the crisis worsens the veil of obsfucation and delusion is being ripped aside by brutal reality and the true nature of the system revealed for what it is.

The line between the openly corporate state and fascism is unclear and one can glide into the other with ease. Democracy is rapidly being replaced by a harsher and harder alternative as we speak. It's happening before our eyes. This may well be the last 'meaninful' and 'free' election we see for a long time.

What's going to be left standing? It all depends how bad things get. Usually the military is left standing when society begins disintegrating around it. This could happen in the United States too. The military has the discipline, the organization and the prestige to survive when much else falls. It already functions as almost as a state within a state.

One of the collosal problems we face is that the financial system has created a huge blackhole of debt many times bigger than the real economy which can no longer support it. There is a massive dislocation here. It would appear impossible for the real economy to 'buy back' this stupendous debt no matter how hard they try. The debt is so much bigger than the real economy. The dark and whirling debtstar, has the power to swallow not just banks, one after another, but entire countries too. That is the wealth and tax revenues of entire countries.

I hope we're not heading for a second Great Depression, that would be ghastly and terrible. Unfortunately I think the signs are pointing in that direction.

You are right about the debt exceeding the wealth of the real economy-the USA is on track to completely drain all the wealth out of the country and transfer said wealth to foreign and domestic financial players. I would assume this incredibly destructive track will be altered at some point, but it doesn't look good as both candidates, most politicians and pretty well all of the MSM are right on board. If Paulson's scheme were to eventually suck out 15 trillion I am not sure if the USA could withstand it, considering the implications of oil depletion during the next 5-10 years.

E.F. Shumacher pointed out a possible strategy to follow in nationalization. Businesses would be required to give the government a share in ownership and control via a stock split. In exchange the business would no longer pay taxes. The government would receive its share of any dividends the board decided to pay. He suggested that the nationalization would start with those businesses which employed the most people. He also suggested that the highest pay for the top executive be limited to ten times that of the lowest paid employee. Oddly enough this has similarities to what has happened at AIG. There are also significant differences in that we bought a failing business and instead of keeping its productive assets we are keeping the worst parts of the business and will likely sell the good parts back to Wall St for a pittance.

we bought a failing business and instead of keeping its productive assets we are keeping the worst parts of the business and will likely sell the good parts back to Wall St for a pittance.

I hadn't thought of it that way.

How Much Nationalization Is Appropriate?


The US is morphing into the Soviet Union before my eyes.

The Soviet Union without the Marxism, the vodka and the fur hats.

For failed businesses, there is a good system in the US; it has lots of well trained, highly experienced personnel. It's called 'Bankruptcy Court'. It really works well. Debts are forgiven and businesses can reorganize under judicial supervision, or under trusteeship.

The 'Sovietization' of failed assets was a primary contributor to USSR's collapse. Their failed assets were countries. The US's large and growing collection of failed assets is becoming equivalent in scale to the Soviets' collection of defunct satellite states.

It is one thing for a leadership to make mistakes, nobody is perfect. To embrace failure the same way an adversary did is idiotic.

Where does all of this end?

Most of the solutions are geared to assisting liquidity, although part of Paulson's plan is to purchase toxic debt. Liquidity is not the problem, banks are hoarding cash to bolster their balance sheets. The problem is the massive levels of now toxic derivates which has also been insured mainly by AIG. Banks are afraid to lend in case the borrower goes bust.

This debt mountain is some 650 Trillion Dollars globally, bailouts of a couple of trillion can only serve to shore up this ediface for so long. Nothing can be done to make this debt 'go away'.

Worst case scenario: The mountain of debt collapses wiping out every major currency. Countries are bankrupt. Welcome to the Nu-Stone Age.

All this was expected to happen with Peak Oil, it seems the Global Elite have pulled the trigger early.

I would argue that the relatively higher price of oil and food in the last few years pulled the trigger. The great weight of debt could not longer be supported.

Also, part of the reason for the recent run-up in debt was to disguise the lack of growth that was taking place, as oil production leveled out.

Well said Gail,

That and the ticking time bombs of backended balloon payments hidden inside of subprime loans and teaser rate credit cards.

What the Captains of Capitalism seem to forget is that all the prosperity arises from the wretched working folk down in the boiler rooms of our good ship Titanic. Squeeze them with increasing fuel costs, increasing food costs and increasing rent/mortgage and credit card costs and sooner or later they can't keep up any more.

A house doesn't pay a mortgage. It's the people who live in the house and have jobs that pay the mortgage. When the mortgage payments cease, the paper (promissory note) that supposedly brings in the revenue stream becomes a hollow promise.

I am amused to recall how the Pundits of Capitalism were running down Communism in the 70s and were jumping with joy when USSR collapsed. Where are they now and what are they to say now that the US govt. is nationalising the private companies faster than what Putin is doing in Russia?!!
Thank God our Indian Govt. did not open up the banking and insurance sector totally to foreign investment despite the pressure from US govt. Otherwise our banking and insurance companies would have been in the same soup abd sunk down the same way as Lehman Brothers and AIG.

According the 'The Times' the US is considering morphing their toxic asset buying program into the British approach, in which preferential equity is taken, but allowing others to buy at the same price as the Government when liquidity is required:

I can't remember when I last thought that the UK government was right about anything, but in this case they do seem to me to have taken the right steps, as it actually addresses the underlying problem of liquidity and recapitalisation, and at least potentially gives the taxpayer something at least back.

It is though, still a drop in the bucket compared to the size of the financial markets, so success is far from guaranteed.
We do now have the fundamental instruments in place to avoid financial melt-down, although tough times are still ahead, as in both the UK and US many estimates still put the over-valuation of house prices at around 30% at least, and personally taking account of recession I would put the minimum overvaluation at around 50%.
Personal debt in both countries has to come way down too, so the hits on the balance sheets will come thick and fast.
So you are looking at a five-year recession, before factors like the low availability of oil are considered.
If the financial system avoids breakdown though at least that helps.

If the US wants to follow the British pattern, it should be noted that the sums involved if scaled up to the US economy are around $5 trillion, not the puny $700 billion of the current plan.


You have raised some important issues regarding nationalization. I have a few questions that have arised in my mind. Have the curtains of capitaliasm finally fallen? Take a look at Ireland, their top 3 banks are now nationalized. Have we over extended government intervention? We've gone beyond typical monetary and fiscal policies, to taking control of instituations that were built on private equity and entrepreneurship. If we continue this trend, are we infact discouraging future expansion, or at least dampening it? Once these companies begin to bounce back, how will we proplery distribute profits?

I think the issue is not when the banks bounce back, "What do we do?", but when things continue to get worse, "What do we do?" I think both peak oil and the nature of the credit crisis assure that while there may be temporary ups and downs, the long term trend is only worse. We have already (since I wrote the post) seen that AIG's problems were worse than originally anticipated. At what point do we have to "just say no"?


In the case of natioinalized assets, wouldn't in be a case of never being able to say "No"? Whatever the institution or industry isn't the gov't just as obligated to sustain it just as they are required to sustain payments on T-bills. In the case of Fannie/Freddie, now obstensably in the hands of the gov't, how could they ever be told "No"? In other words, how would the economy survive if the gov't chose to shut down the entity which provides half of all US mortgages? Are't we really talking about the ultimate "too big to fail" scenario?

1 The government lowers the FED lending rate.

2 Banks drop the amount of interest paid on savings accounts, CD's, money market funds.

3 People take their money out of banks and buy real estate, stocks, bonds, mortgage backed securities anything with a higher interest rate.

4 High interest mortages and ARMS are sold to those with bad credit, low income, minimal down payments on easy terms.

5 Interest rates were raised to try to get more people to lend and to increase the savings rate.

6 ARM's reset triggering foreclosures and a flood of homes available on the market.

7 The government tried to lower interest rates triggering a credit crisis.

8 The government not knowing what is going on starts buying mortgages that should not have been written in the first place. That was easy. Then they try to take over the banks to make it easier for people to get money.

9 The government has not fixed the problem of bad loans being written. It gets caught in trying to manipulate the banking system and more catastrophe occurs.

10 Nationalizing a banking system the government cannot fix through legislation could lead to more chaos, loss of wealth, and huge losses from under-collatoralized lending to those with poor credit histories and potentially shaky cash flow.

It really hit home today. I knew GM was not doing well, but in the past when GM was in trouble it meant a couple of quarters of poor earnings, maybe a plant closure or a model discontinued.

I happened to catch a link about GM today. I'm completely flabbergasted. No matter what you think of their cars, GM is one of the biggest economic engines in the history of the world. They have divested a lot of pieces like Delphi the last few years, but they all pretty much rely on business from GM, as do literally thousands of other suppliers and subcontractors. It is an economic ecosystem that goes around the world and touches millions of people.

Look at GM's financials. 263,000 employees, $171 Billion in revenue, and a market cap that is now only $2.6 Billion? How does that happen? Their stock has dropped over 80% in the past year.

It is hard to imagine they are going to survive without some significant intervention, and who has the resources besides the US government, making the assumption that even the US government can help? China? Middle East?

And then what about Ford? What about Chrysler, which is now a private concern? Both are either slightly better or slightly worse off, depending on who you believe. Do you let them all fail? Do you save all three? Do you withhold life support from Chrysler because they are not publicly traded? If one of the big three fails, the pension liability would crush the Pension Guarantee Fund, as well as cutting benefits for hundreds of thousands of people. If all three failed, the repercussions would be staggering. Detroit would be the modern world's first urban ghost town.

This is it. There can now be no question that we are truly facing the worst economic crisis since 1929.

If the analysis on this forum is anything like right, then demand for cars will not only collapse, but can't revive, as there won't be the fuel to run them on.
Some of the most optimistic like myself feel that EV technology can play a part, but it certainly should not be imagined that that implies anything like BAU, at least in the US, Australia and Canada.
Neither finances or technology will allow for the mass production of millions of hybrid or electric vehicles offering similar performance to present ICE cars in a smooth transition.

Those who are lucky enough to have anything better than a bike, a motorcycle or electric bike, will probably mostly be driving in glorified golf-buggies - check out some of the weird designs on offer at the Paris motor show:

The advantage is that some of these very lightweight and low-range vehicles have a target price of Euros 5k -under $7k.

Some traditional car manufacturers will survive, but will have to radically change and most of their most profitable lines will no longer sell - so Toyota will largely be making tiny Kei cars, with small profits and a totally different business model to today.
Many of the cars of tomorrow are likely to be built by much smaller organisations, as they use a fraction of the metal and metal pressing of current cars.

The American companies seem likely to be unable to carry out the radical adaption needed, as for a start their pension liabilities will kill them.

A British scenario with successive failures to prop them up seems likeliest.

GM? Ford??

Let them fail.

Chrysler should hve not been put on life support the first time...G.M. - Ford - Chrysler....all things come to an end in this world. Their time is upon them. They need to go, as do a number of Dinosaurs.

Be careful in what you wish for...the failure of any of GM, Ford and/or Chrysler would produce worldwide economic fallout. Failure of all three would push the US into a full blown depression, which would probably tip Europe and Australia, too.

The difference between state capitalism (USSR, Cuba, Venezuela)and socialism is the same between the TV (centralization) and the web (cooperation)....

The cells of a living organism are differentiated and take part in the whole process. An organic whole always improves the efficiency of its differentiated parts, because only in this way any individual cell can give the best of its potentialities to the general organism (as Marx stated in his notes of 1843).

Organicity excludes organizing formalisms, when not essential. Today every social productive activity is centralized, planned, correlated; in short, it is in keeping with the technical standard reached by the ultramature capitalism. Socialized technique and work are natural part of mankind, and appeared in history since the highly organized ancient communities. Therefore, discipline and centralism do not come from a moral or statutory rule, but are the practical result of the organic relation between individuals as a whole and their aims.


Naomi Woolf in her You Tube video spells out clearly the historical ten steps to fascism.

By any definition, Dearly Beloved George, has finally taken the US into fascism.

Sadly all this intervention by the Fed and Treasury, although not actually fascism, has used all the classical propaganda tools of fascism. The outcome will be consistent with fascism. If we actually save the Republic it will be precisely on the terms of the Ruling Financiers, not in the interests of the democracy.

Sadly because the US has fallen so deeply and easily into this fascism I foresee bitter and violent reactions from the people as this fiasco slides down its expected graph to Depression.

We are already at financial Hells Gate but our beloved leaders assure us that we are not even in Recession yet.

Are we Stupid or what?? ---yes.