Financial Crisis … Visited
Its been a while, but I have still been writing like a demon. It’s all over at The Diplomatic Courier.
The first piece is on the economic meltdown, with the failure of Wall St.’s major firms and how Washington is taking assertive steps to intervene:
The U.S. government has alternately saved companies deemed too large to fail, let others fall on their swords, before moving back to saving institutions. With markets continuing to fall, the Bush Administration has evidently seen the limitations of addressing the problems of individual firms.
Changing tack, Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke—himself an expert in the 1920s and ‘30s—have sought to address the underlying issue by using at least $700 billion in public funds to buy up the troubled assets from private companies.
With the increasing government action in Washington, many are writing Miltonian economics obituaries. One Republican senator lamented: “The free market for all intents and purposes is dead in America.”
There is certainly a shift towards a more hands-on approach to managing markets; but there are also limits to how far U.S. officials are willing to go. For example, Bush Administration officials were quick to quell calls for limits on executive pay. Also, these more intrusive measures have limited life spans. The most recent plans to buy up securities will run for two years. Similarly, the loans that have been issued to AIG and co. have a two-year span. These plans are meant as a short-term elixir, rather than a long-term regulatory structure.
Check it out to see if the free-market system is truely dead.
