The net loss of over 7% (812 points) of the Dow Jones over three days (wiping out all gains made since the second week of November, 2005) is an effect of the US government takeovers - nationalisation - of no less than three financial entities.

The first two, Fannie Mae and Freddie Mac, were originally quasi-government owned (managed), so while it might be easy to overlook that, the takeover of AIG (American Insurance Group) to the tune of an $85 BILLION line of credit in exchange for the “taxpayers” taking over 79.9% of AIG’s assets is not so easily overlooked.

And with Dow Jones well within sight of crashing through the 10,000 floor … we may be looking at only the beginning of an economic bloodletting that could finally tip us over into the Great Depression II, which writers like Soejima Takahiko and other doomers have been gleefully awaiting to vindicate their theories.

Are we looking at a whole new era of federal nationalisations of any business that appears to be failing (providing of course, it passes the size and interest tests)…?

Looking at the Bank of America acquisition of Merrill-Lynch, and Washington Mutual (WaMu) shopping for buyers… these short-suspense cannibalisations seem to be based upon the premise that if they become “too big to fail”, then Uncle Sam will step in with loans drawn upon the taxpayer’s back, and their children’s futures.

This cannot bode well for the free markets, and if this is going on during the “green tree” of an ostensibly free-market “Republican” administration, what shall happen during the “dry tree”… if the socialism-loving, nationalisation-trigger-happy Democrats take over on January 2009?

Rep. Maurice Hinchey (D, NY-22) and Rep. Maxine Waters (D, CA-35) have made it perfectly plain that if given their druthers, they’d nationalise the oil industry in a heartbeat. Between this and these “emergency taxpayer buyouts”, a.k.a. nationalisation of private banks and insurers, these are acts undertaken only in a wartime command-style economy.

These are unprecedented actions in peacetime; even at the height of Democratic Party’s ultra liberal single-party lock on the Presidency and both houses of Congress in the 1960s, this sort of socialism was unthinkable.

The question remains, what sort of socialism are we stumbling into at a madman’s breakneck pace?

Is it the fascism or national socialism that privatises the gains of the corporate fatcats who may just have made the right donations to the right people’s campaign funds, and socialises the losses of these same fatcats when they prove to be incompetent?

Or will it be the outright socialism from the left that utterly crushes the free market, never even allowing any entrepreneurs and capitalist from having the chance to make mistakes - by preventing them from ever having a market share?

The right thing to have done would have been a laissez-faire policy that allows badly structured and irresponsible corporations to fail, and outstanding corporations that produce value for its investors and great products and services for its customers to excel.

Socialism - whether from the left or from the right - be it fascism or Marxism - is plain wrong.