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‘The times are a changing’ – from being the torch bearers of Laissez-faire and free trade, US lawmakers are turning protectionists - something which the country has always fought great economic battles over in order to get to top of the heap.
How many bursting bubbles can the Fed and US taxpayers’ money support in these extraordinary times, when many financial institutions that were considered rock solid are coming down crumbling like sand castles to hostile winds.
Gorge Bush has another battle to fight to protect homes caught up in the sub-prime triggered crisis which is threatening the US financial market and sending shock waves around other global markets.
Should the malignant strain take root in the US economy and investors’ confidence erodes, a crisis worse that the 1929 Great Depression stares in the face.
The mess such a scenario will create around the globe cannot be gauged easily but the warning signs are scary.
There are so many US dollars around that it will be difficult for any economy to decouple fast enough to save itself from the impact of a sinking dollar.
One wonders whether state intervention will be able to save the situation because confidence in the American model is fast eroding.
At the same time, the verdict is clear that globalization, free trade and the principles of laissez-faire are not enough for creating an equitable global society.
It is also becoming apparent that the Russian botched up socialist economic model which collapsed in the late 1980’s and early 1990’s was actually responsible for supporting the West’s capitalist model.
Attracting the best brains from other countries to fuel unfair competition and unleash it on the very nations from where the brain drain did take place kept the US economy on its growth path.
But once the Russian model collapsed and the need to remain competitive lost out to living expensively, out of cheap credit taken from countries like China and meddling in the Middle East to suppress oil prices, the worlds greatest economy along with all its military might is suddenly very vulnerable.
There are many lessons to learn from what is unfolding on Wall Street, and countries trying out the American model for development need to take correctional steps, lest they get trampled over.
RSS 
USA: Socialism for the rich
Is the United States of America a capitalist state, a communist state or a socialist country? The answer is obvious is it not? It is a capitalist country…well er so you thought.
When Lehman, AIG, Merrill, etc. were distributing high salaries all of them looked like they believed in capitalism. Surely they would have said “there should be no government oversight” - thank God for the English language! Surely for FED it was oversight. All that happened was over its sight!!
Now that Lehman has gone under, and AIG was almost there, there is a clamour for government help - Fred and Mac got help, but Lehman did not. Now AIG has got protection. Will somebody get up and say how does the FED behave? Please? What logic?
Anyway if I sound like a commie, please excuse me. Does it not sound like the profits are in the private sector, the risk on the government, and failure on the tax payer? To me this sounds bizarre.
Of course there’s no perfect socialism, just as there’s no perfect capitalism. There are mixed economies, however.
Anyway, FED and Treasury are working by their subjective logic. I mean which institutions qualify for state help is a question that’s baffling.
$700 billion is being debated over and over again. Yes, majority of the burden would definitely fall on the taxpayers, but they are trying to install provisions that will recuperate bailout out of sale of assets and future profits.
Till that happens, US citizens are left to lick their sub-prime wounds and rue the lack of transparency that has characterized their financial system of late.
Again I’d like to believe that bailing out of institutions is more like a temporary measure. Every Capitalist economy practices welfare to some degree (even more so than their socialistic counterparts). The nationalization is necessary at this point in time to avoid a depression. If investors loose all their faith then nothing would save the economy and hence there is a strong case for buying the big corporations.
You term the economic crisis as ’judgmental error, a tendency to overspend’ to which I disagree.
The Central Fed headed by Alan Greenspan artificially kept interests low for over a decade and caused a housing boom in America.
Under the false impression of being rich by easy availability of cheap credit, the average American dipped into the dream and lived beyond his/her means.
Coupled with this was the consumption of gas/petrol which was low priced and easily affordable.
Just hope the state intervention of pumping in billions to stave of a depression works, and like you I’m banking on the American economy of pulling through but should in not - there are real hard times not seen ever before awaiting to unfold.
And the interest rates being kept low, providing little stimulation to a propensity to save is exactly what I meant by ”judgmental error, a tendency to overspend.”
Obviously there was hubris in assuming that US can live on borrowed funds - trade credit - from the developing economies of the world, especially China.
And if it all crumbles then the entire world will suffer, to varying degrees, of course.