November 29th, 2008 | 
Author: The Banks Are Now Indebted to Governments
Just last week Obama promised to spend hundreds of billions of taxpayers’ dollars to prop up the sinking U.S. economy and Gordon Brown’s British government announced that it would take from the “rich” in order to finance an economic rescue.
The Bush administration has all but nationalized the world’s largest bank, the Citigroup and it has also thrown in an additional $800bn to attempt to thaw America’s starving credit markets.
The banks meanwhile are pretending that they are still answerable to their shareholders whereas they are in fact only surviving with very explicit financial guarantees from their governments.
In spite of extreme attempts at resuscitation the markets continue to lack confidence however and if nothing changes soon then capitalist countries will have little choice but to assume even more direct control and even possibly take direct ownership of their banks.
In the U.S. and Britain, the centre-left understood more than a decade ago that if it wanted to win elections that it would have to accept Reagan-Thatcher economics and Bill Clinton promised the end of big government.
The bottom line is however that main street America did not vote to throw out the capitalist baby with the bathwater and the leading members of Mr. Obama’s new economic team are amongst the most enthusiastic believers in liberal markets.
Financial boundaries have moved and although downswings always created a backlash they were more often than not forgiven because of the following upswing, but this time the bust was so much more severe that the effect of the crash will be felt long after the actual recovery occurs meaning that ‘forgiveness’ will be much later in coming.
The public no longer trusts the market and it’s not clear whether president elect Obama and other leaders will be able to right the wrongs at any time soon, but what is certain is that financial thinking and the world’s markets will never be the same again.
The Banks Are Now Indebted to Governments.
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Posted in Brown, collateral, crisis, economy, failure, government, nationalization, Obama, piggy banks, recession | 
Tags: Brown, collateral, crisis, economy, failure, government, nationalization, Obama, piggy banks, recession
