Am I mistaken in interpreting the Federal Reserve Banks efforts such as the assisting of rescuing Bear Stearns as an example of socialism being used to save us from certain excesses and abuses of capitalism?
Not really. It is actually a common phenomenon of modern industrial (and, perhaps, "post-industrial") capitalism.
The idea that the economy should be "regulated" by the mythical "invisible hand" was formulated by the earliest capitalists (like Adam Smith) back in a time when the economy was considered to consist of many small individual buyers and sellers, each one too small to have a significant effect on the industry. This is still the view held by grade school children and libertarians.
In real life the era of small businesses passed long ago, if it ever existed to begin with. Most industries are now dominated by a very small number of corporations forming oligopolies and/or oligopsonies. In this case, one corporation can and does have a huge effect on the industry, which seems to be the case here.
So, the goverment becoming involved in the economy is no more a violation of classical capitalism than the fact that Bear Stearns has, individually, such a huge potential effect on the economy.
But capitalism vs. socialism has never been defined by laissez faire vs. active government response. It is true that the long out-dated classical capitalist theory (now only taught in grade schools and libertarian circle jerks) always advocated no government involvement in economic affairs (except in unusual and carefully delineated areas), but that has never been the defining characteristic of capitalism.
The defining characteristics of capitalism vs. socialism is who controls the means of production. That is what the "capital" in "capitalism" means, after all.
There is a tragic flaw in our precious Constitution, and I don't know what can be done to fix it. This is it: Only nut cases want to be president. -- Kurt Vonnegut
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