Federal reserve chairman benBernanke's statement last week that economic conditions are "skewed to the downside" was the most muted assessment of a dismal situation since Emperor Hiro-hito, in his surrender broadcast after Hiroshima and Nagasaki, said, "The war situation has developed not necessarily to Japan's advantage." There often are, however, upsides to downsides.Furthermore, in this transformative summer, America's political argument is being fundamentally recast in two ways that will reverberate long past November.In today's Niagara of bad news, the melancholy fact that General Motors' market capitalization recently dipped below that of the Hershey chocolate company testifies to the efficiency withDomestically, the relationship between the national government and the nation's economy has changed more in recent weeks than at any time since the Depression. During the New Deal, the pell-mell expansion of government supervision of economic life was propelled primarily by fears generated by cascading events. But another propellant was a constellation of doctrines-about capitalism's "contradictions," "market failures" and the need for socialism, or at least "planning" through government control of the economy's "commanding heights." Today, the "social safety net"-a phrase that originally described aid for widows and orphans-is being radically enlarged to provide security for investors in large financial institutions. This enlargement is being improvised by conservative Republicans whose only doctrine is the theory of TBTF. The theory is that this or that institution is too big to (be allowed to) fail.
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