ninme

The Times - That rubbish they talk about the credit crunch
Capitalism is dead. America has gone socialist. US leadership has collapsed. Europe has shown the way. Oh yes? By Gerard Baker

For starters, acquiring the financial equivalent of a junkyard is not quite what socialists have in mind when they urge nationalisation.

In any case the actual outlay will not be anything like $700 billion. The Government is merely proposing to use that money to buy the putrid assets that now clog the balance sheets of banks. When the frozen credit markets thaw, it will sell them back. It’s unlikely the whole exercise will cost more than a couple of hundred billion dollars, which represents about 1.5 per cent of the US economy.

That leads us to the argument about capitalism’s terminal failure.

As I’ve argued before, the current collapse owes as much to government intrusion into the free market (the abominable hybrid of Fannie Mae and Freddie Mac; the regulatory requirement that banks lend money cheaply to those who couldn’t afford to repay it) as it does to the madness of free market savagery. There’s been precious little financial deregulation in the past ten years. The one big piece of liberalisation - the abolition in 1999 of Depression-era legislation that separated commercial and investment banks - has been a lifesaver, enabling investment banks to save themselves by merging with, or becoming, retail banks.

Capitalism’s Cassandras might also want to consider that the crisis the current mess most closely resembles is the Swedish banking collapse of 1991-92. I don’t remember Sweden being reviled in those days as a model of heartless capitalism.

I just had Rush on. Ranting about Fred Barnes and the “idiotic” conservative line on this against government intervention. It was upsetting me. But Gerry, ahh, Gerry.