Proposal number five of Karl Marx’s Communist Manifesto was to bring about the “centralization of credit in the banks of the state, by means of a national bank with state capital and an exclusive monopoly.” This is exactly what our central bank, the Federal Reserve, has now done. Anyone who thinks we are still a capitalist country needs a reality check. We haven't been a capitalist country since FDR and the New Deal. It is ironic that Bush and the republican "free marketeers" have dealt the final blow.

According to the September 29, 2008 Financial Post “The taxes that will need to be levied to finance this package (the $700 billion bailout) may keep some firms alive, but they will siphon off capital, kill jobs and make businesses less productive elsewhere. Increasing the money supply is no different. It is an invisible tax that redistributes resources to debtors and those who made unwise investments.”

Today’s more than 900 point gain by the Dow Jones Industrial Average was the result of the government’s announcement that it would buy preferred shares of damaged commercial and investment banks with the $700 billion set aside to purchase “toxic” assets of specific banks and virtually worthless securities backed by mortgages.

In addition, the FDIC is expected to temporarily extend its guarantee of bank deposits to include certain new funds raised by banks and thrifts for three years. That would be an aid to lenders that have had a hard time raising capital without government assistance.

Not only does this mean that the government position will come before investors in common stock, but it also paves the way for more such purchases in the event that more assistance is required. Although preferred shares do not include voting rights, preferred dividends are paid before common dividends. Essentially, the government is giving taxpayer money to these banks without any form of control over what these banks do with that money.

Questions regarding decisions made by these banks in the future and the price fluctuations that might occur as a result of the government buying and selling these securities, or holding them and draining dividends from common, may add to already difficult problems for common shareholders. For example, what would happen if the bank had a bad year and was forced to pay all of its money available for dividends to the government? The stock would plummet and common shareholders would be left holding the bag. If the government decided that it would take no dividends at all, then there is no return to taxpayers. These preferred issuances would most certainly contain provisions that the shares could not be traded; otherwise the government would have the ability to move markets.

It has always been taboo to even think about government ownership of businesses. Now, it has become considered essential to the continuance of our economy as we know it. Unfortunately, what Americans don’t understand is that this is the end of our economy as we know it, not the continuance.