OK, maybe that is a bit of an exaggeration. But I keep saying it and I will say it again - NEO-LIBERALISM IS DEAD! Dead! Dead! Dead! Now one of it’s main ideologues, it’s key architects, is practically admitting so. Check out this video clip of Alan Greenspan’s testimony before The House Oversight and Government Reform Committee last Thursday (warning, you may want to just listen to the audio, Alan Greenspan and Henry Waxman are quite possibly the two ugliest men alive - actually alive might be questinable in Greenspan's case)…
http://www.youtube.com/watch?v=55-A1-D3MR0
Here is the New York Times report on the hearing…
http://www.nytimes.com/2008/10/24/business/economy/24panel.html?_r=1&oref=slogin
Oh, I only wish Milton Friedman was still alive so he could similarly grovel before the American people and the world.
http://www.youtube.com/watch?v=55-A1-D3MR0
Here is the New York Times report on the hearing…
http://www.nytimes.com/2008/10/24/business/economy/24panel.html?_r=1&oref=slogin
Oh, I only wish Milton Friedman was still alive so he could similarly grovel before the American people and the world.
I wonder what Friedman would say too. The only plausible way to continue to defend neo-liberal economic policy is by opposing government bailouts. period. Thus creating a market-related punishment for acting fiscally irresponsible. But very few economists, if any, seriously suggest this because, based on the current financial systems every bank is linked through secret, unregulated credit swaps with no margin or collateral. So if one bank fails, it starts a domino effect that causes bank after bank to go into default. And if every, or nearly every, U.S. bank failed, the government probably couldn't even support the FDIC anymore.
ReplyDeleteAnother aspect of this is the degree to which many
upper-middle, middle, and even many working-class families now have a stake in the U.S. financial and stock markets. And while their piece of the pie is considerably smaller as compared to the wealthiest 10% (miniscule, in fact) it could be argued that their respective risk is equal to, if not higher than, those with much greater wealth. I hear from so many people at my work who are really concerned about their 401ks and other mutual fund investments. These are not dabblers in the market. These are people who have put their faith - rightly or wrongly - in the power of the U.S. economy to secure, at least in part, their future. It's a gamble that's looking riskier in hindsight, but after about 60 years of more-or-less consistent growth its easy to see how most people felt pretty secure in their investments.
It is interesting how the option for the government to buy preferred stock in these failing institutions was practically snuck into the financial bailout plan at the last minute, merely as a possible option for the Treasury to consider. And now it's looking like that is the soundest option for going forward, despite the shrieks of "socialism" coming from the right-wing. Maybe, in the end, banks really would rather be red than dead.
(Or, more likely, they'll use this as a reprieve to shore up other financial institutions before letting these government-backed banks fail.)