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It's not full-fledged "crony capitalism" as practiced in the Latin countries, but it's a big step in that direction. A firm deemed "too big to fail" by a government with unbounded power to bail such firms out has been told, in effect, that there's no such thing as too great a risk. That frees it to play all the longshots -- the gambles with the highest potential return. The Treasury will make good on its losses.

Of course, the most recently bailed-out companies include a couple that were coerced into robbing their stockholders and debt holders. That happens under a full crony-capitalist scheme sometimes, too. One way or another, when you deal with the Devil, the notes come due in brimstone.

Freedom, Wealth, and Peace,
Francis W. Porretto
Curmudgeon Emeritus of Eternity Road

At the height of the financial crisis in 2008, the Republican Congress correctly rejected the Paulson/Bush bailout scheme. McCain foolishly suspended his campaign and flew back to Washington to help save the day. During that week, behind closed doors, Paulson and others somehow convinced the Republican House to reverse its vote and allow the bailout legislation to pass.
Conventional wisdom says the entire financial system would have collapsed had the bailout not passed. Certainly, the McCain campaign collapsed during that week.

Would the financial system have really collapsed? Possibly not. The S&L crisis of the early 1990’s did result in the closing of many insolvent financial institutions but did not result in the financial system collapsing.

What if the financial system had collapsed? We might actually be better off today. The speculators would have been wiped out. Average Americans would have been protected by FDIC insurance. The failed financial institutions would have been reorganized in the bankruptcy courts with some being liquidated. The financially sound institutions, who engaged in responsible business practices, would pick up market share. General Motors and Chrysler would have been downsized and reorganized in bankruptcy courts (like the airlines were in the 1990’s) instead of becoming wards of the state. Obama would be president but he would not have administrative control over the banking system and automotive industry.

Likely a full financial collapse would have impacted large corporations in bed with the government to a greater degree than mid and small size companies. Out of the ashes of a collapse could have come a revitalization of American capitalism without the cozy mutual beneficial relationships between big government and big corporations. Instead, with the bailouts we accelerated a rush to socialism and state ownership of the private sector.

It's not full-fledged "crony capitalism" as practiced in the Latin countries, but it's a big step in that direction.

Thank you for sharing your ken, Francis. The attitude of the neo-Marxist is to be whatever they must be, to advance their structural Marxofascist agenda, worldwide (preferably in nice, pseudodemocratic ways, of course). They appear more pervasive and coordinated (and intent upon America) than at any prior time in history.