Last fall, as Federal Reserve and Treasury Department officials rode to the rescue of one financial institution after another, they took great pains to avoid doing anything that smacked of nationalizing banks.What sort of results can we expect when the government nationalizes an industry? Remarkably, the NYT reported on that this week, too:
They may no longer have that luxury. With two of the nation’s largest banks buckling under yet another round of huge losses, the incoming administration of Barack Obama and the Federal Reserve are suddenly dealing with banks that are “too big to fail” and yet unable to function as the sinking economy erodes their capital.
President Hugo Chávez, buffeted by falling oil prices that threaten to damage his efforts to establish a Socialist-inspired state, is quietly courting Western oil companies once again.UPDATE: David Rothkopf shares the schadenfreude:
Until recently, Mr. Chávez had pushed foreign oil companies here into a corner by nationalizing their oil fields, raiding their offices with tax authorities and imposing a series of royalties increases.But faced with the plunge in prices and a decline in domestic production, senior officials have begun soliciting bids from some of the largest Western oil companies in recent weeks — including Chevron, Royal Dutch/Shell and Total of France — promising them access to some of the world’s largest petroleum reserves, according to energy executives and industry consultants here.
Venezuela may have little choice but to form new ventures with foreign oil companies. Nationalizations in other sectors, like agriculture and steel manufacturing, are fueling capital flight, leaving Venezuela reliant on oil for about 93 percent of its export revenue in 2008, up from 69 percent in 1998 when Mr. Chávez was first elected.
Meanwhile, in other Latin American news: Venezuela's Hugo Chavez seems to have lost a little of his bravura recently with reports in the papers today that as his reserves of fuck you money dwindle due to declining oil prices, he is offering the oil companies he once screwed the chance to come back to Venezuela. Bienvenido a Caracas, mis amigos, all is forgiven...er, please forgive me. Now if only we could harness the power of those oil companies to really deliver a lesson. Imagine for a moment a different world, in which big multinationals committed to a program of not investing in countries that were not dependable democracies or showed disregard for the rule of law. Think of the countries that would be squeezed, forced to change. Now that would really be the power to change the world. Meantime watch: slowly but surely Chavez's chutzpah-laden outreach will bear fruit...as long as there is a safe profit to be made...and he will more than likely be propped up by some of the same people he once abused.[HT: Andrew Sullivan]