We thought we were witnessing the nationalization of financial institutions, when in fact what is actually taking place is the financialization of the state. Last week George Osborne, Tory politician and still the likeliest candidate for Chancellor of the Exchequer in 2010, called for the state to act as a bank, directly offering loans and guarantees to businesses. Using three adjectives not often heard on the lips of British conservatives, he demanded that the state take “big, radical, activist steps”. “I’m a monetary policy radical in the circumstances we are in at the moment,” he argued.
This idea of “radicalizing” the state and its role in the economy, by turning it into a de facto financial institution, seems to be one of the key themes in the politicians’ response to the crisis. It resonates with Ernesto Zedillo‘s saying, that when the markets overreact, policy-makers must overreact too (Zedillo was President of Mexico from 1994 to 2000, and knows a little bit about overreactions).
Adding another fine term to this bizarre dictionary of politico-financial terms, today’s New York Times announces that the US government is about to bail-out Citigroup, and will in the process “soak up” billions of dollars in losses. The verb conjures a truly Sloterdijkian image: the state as a sponge.