I’m awestruck by the opposition leader’s grasp of the ‘global financial and economic crisis’ . The opposition leader vehemently denies freemarket capitalism caused crisis, he says:
“Those people who say, oh this was caused by an excess of capitalistic free-market activity are quite wrong,” Mr Turnbull told ABC Radio on Friday. The catalyst for the crisis – the US sub-prime collapse – was the result of interfering with and subsidising the housing market, he said.
“The fundamental error was … lending money to people who can’t afford to pay it back.”
“You do that on a large scale, you’ll end up with these problems.
I was hoping Malcolm Turnbull would explain in more detail what he means by his simplistic comments. Geez, I can find another factor without much effort (Lax oversight perhaps? ASIC gave `clean bill of health’ to Storm). And I actually thought that multiple failures of the system were responsible. Silly me. Oh, and his opinion fits with his personal profile as an elitist.
SO, if his claim were true that would mean he should have known full well that easy money was being dished out to those who could least afford to pay it back, if economic conditions did happen to change, like they obviously have?
He should have also taken time out to explain to his boss why it’s not a good idea to encourage people to lend until their hearts were content because interest rates were low and there should be no fear of an economic downturn whilst he was at the helm, perhaps?
But then again, he used to be an investment banker which explains why he’s so keen to simplify the whole problem. The deregulation of banking wouldn’t have been a major contributing factor would it?
The current crisis just as convincingly represents a failure of the Big Government/Neoconservative (or, outside the United States, what is called“neoliberal”) model that promotes deregulation, reduced supervision and oversight, privatization, and consolidation of market power in the hands of money manager capitalists.
In the United States, there has been a long-run trend that favors relatively unregulated “markets” over regulated banks that has also played into the hands of neoconservatives. The current financial crisis is a prime example of the damage that can be done by what has been called the “post-regulatory environment” (Thomas 2008).
The swing toward markets and away from regulated banking greatly increased risk, while at the same time it necessarily extended government assurance to the unregulated institutions for the simple reason that the government cannot allow a financial crisis to threaten the economy.What Bernanke called “The Great Moderation” is also known as the “Greenspan put”—the belief that no activity is too risky because the Fed will intervene if things go bad. Unfortunately, it is Chairman Bernanke who is left to clean up the mess left by years of lax oversight and deregulation that operated to the advantage of Wall Street.
Over to you
Are we in for a slow recovery?
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