The (Almost) Meltdown

Privatise the profits and socialise the losses was always the philosophy of Roger Douglas in NZ , and so it appears in the US as well, where the Bush administration has dipped into the public purse to bail out the greedy corporates on Wall St ...as the country was "just days from an entire financial meltdown" and the "beginning of Great Depression II" ...wow.

Another Douglas strategy : move extremely quickly so nobody can organise resistance or debate or analyse whats actually happening..

The Congress is passing the relevant legislation overnight...

If Wall Street gets away with this, it will represent an historic rort of the American public--all good for the villains, lasting pain and damage for the victims...the public who will be forced to stump for the billions upon billions involved. If this deal succeeds, it may well become a sentinal event in American politics--exposing the deep deformities in the system here.

Couldn't have happened at a better time. While the irony of lumbering the American people with the out-of-control costs of reckless financial trading houses is not entirely lost on the US, the idea that the government can intervene in such a way in the free market is not being recognised as state capitalism by very many here .. But, if they can socialise the banking system then how about the health system?.. McCain seems confusd by the whole thing and Obama has yet to make a comment ...tho they will both presumably vote in favour when it goes to the Senate.

But the scandal is not that government is acting - the scandal is that government is not acting forcefully enough; using its ultimate emergency powers to take full control of the financial system and impose order on banks, firms and markets. Stop the ferris wheel, so to speak, instead of allowing individual financiers and stockbrokers to take opportunistic moves to save themselves at the expense of the system.

A serious intervention in which Washington takes charge would, first, require a new central authority to supervise the financial institutions and compel them to support the government's actions to stabilize the system. Government can apply major leverage to the financial players because they have the big chequebook now : accept our objectives and follow our instructions or you are left on your own--cut off from government lending assistance. If the bankers decline to cooperate, they are stuck with their own mess. If they resist the government's orders to keep lending to the real economy of producers and consumers, banks and brokers will be effectively isolated.

And if the taxpayers are compelled to refinance the villains in this drama, then Americans are entitled to equivalent treatment in their crisis. That means the suspension of home foreclosures and personal bankruptcies (reportedly at 60,000 a week) during the duration of this crisis. The debtors deserve equal protection from government, the chance to work out things gradually over a few years on reasonable terms.