Who’s Responsible for the Current Global Financial Meltdown: Greedy Capitalists or Public Spirited Politicans?
nick cowen, 30 September 2008
One minute America’s seemingly riding the crest of an economic boom we are told will never end. The next moment it’s 1929 all over again.
What’s going on and who has brought us to this current sticky pass? Those in search of an explanation of the economic turmoil will find little help from Britain’s mainstream media.
The American blogosphere has some helpful pieces on the issue which I should like to draw to the attention of readers of the Civitas blog. One is a recent posting on the Mises Institute website. It is worth checking out, especially if recent events have begun to dent your confidence in the ability of markets to manage the economy better than government.
What is happening may be an example of the fable of the elephant and the mouse. The big stable elephant, top of the food chain (Goldman Sachs, Lehman), is reduced to a whimpering freaked out mess by the little mouse ($trillions in mortgage backed securities). The mouse is profligacy, uncontrolled reproduction, chaos. How is he able to able to insinuate himself into the elephant’s world? Is the mouse that crafty? Or is there a weakness in the elephant that he just couldn’t help himself?
Three American presidents tried to take control of the money supply away from the handful of superwealthy families who really rule the world behind the scenes (and own the “Fed”). Those three presidents were all assassinated. Do you seriously think any current or future national leader is going to disobey their orders?
So when Clinton signed the repeal of the Glass-Steagal Act, I guess he was only obeying orders.
Anthony offers windy generalisations. The Mises Institute offers a detailed exposition, with supporting evidence, of the degree to which America’s problem has been excessive intervention and regulation. I think I know which to trust.
The author of the article has a nice try at excusing banks’ profligacy and their flawed business models.
Up to 1979 we had the Corporate state effectively dismantled by Mrs Thatcher. She and President Reagan then introduced de-regulated banking which has now had its day, but which was largely responsible for this financial fiasco. It’s ironic that the two leading exponents of the free market should see it result in the US Capitalist government overseeing the greatest act of nationalisation see anywhere at any time.
Tha anger against “spivs and speculators” is now running its course in Middle America and Middle England uniting the Surrey Stockbrokers Club and the Darlington Working Men’s Club, who both would like to see bankers accepting responsibility, financial and moral, for the unholy mess they have single-handedly created.
It will be a long time before anyone trusts the grey-haired wise old banker again.
Meanwhile if you want to read a just analysis of this mess, go to Nouriel Roubini’s blog. If you want to know where all this might lead consult Dimitry Orlov’s “Closing the collapse gap”.