Guardian UK: Financial meltdown spells the end of the free market model

[marmar]

The political class can't face up to the scale of this crisis
Financial meltdown spells the end of the free market model. It is a gift for any leader prepared to advance a new agenda

Seumas Milne
The Guardian, Thursday September 18 2008


The scale of the crisis engulfing the global financial system can no longer be in doubt. The events of the past few days have confirmed that we are living through the greatest meltdown since the Wall Street crash of 1929. For the second time in barely a week, an avowedly free market government in the citadel of laissez-faire capitalism has been forced to nationalise a linchpin of American finance - this time the world's biggest insurance company, AIG - in an effort to prevent the toxin of collapse spreading further through the US economy.

That followed hard on the heels of the nationalisation of the mortgage giants Freddie Mac and Fannie Mae; the bankruptcy of the country's fourth largest investment bank, Lehman Brothers - corroded by bad debt and bonus-fuelled speculation - and the forced takeover of Merrill Lynch. And a year after the credit crunch triggered the fatal run on Northern Rock, British high street retail banks are being sucked into the crisis: at one point yesterday the country's largest mortgage lender, HBOS, had lost almost 70% of its share value since the start of the week.

Meanwhile, the impact on the real economy is becoming stronger: output in Britain is falling and official unemployment is likely to rise above 2 million next year - the real figure will be significantly higher. More than 100,000 jobs are expected to go in finance alone. The only question is how deep and prolonged the recession will now be.

What is certain is that the dominance of the free-market model of capitalism, which has held sway across the world for more than two decades, is rapidly coming to an end. When its high priests in Washington are forced to carry out the largest nationalisations ever undertaken outside the communist world, while intervening on an unprecedented scale across markets that were supposed to be self-regulating in order to keep the system afloat, the neoliberal order is transparently falling apart.

Naturally, market fundamentalists and ideologues will continue to preach the old religion. The Times argued yesterday that the unfolding of the banking crisis showed that capitalism and markets were working, however "brutal and unforgiving" that might sound. Such otherworldly dogma is not a luxury candidates standing for election can afford - and even John McCain felt obliged this week to attack Wall Street's "casino greed, corruption of excess", while Barack Obama blamed McCain's economic philosophy of deregulation and called for wide-ranging reform. ......(more)

The complete piece is at: http://www.guardian.co.uk/commentisfree/2008/sep/18/economy.creditcrunch1

[malaise]

1. Excellent article

K & R

[panAmerican]

2. Happy to K&R

[dipsydoodle]

3. Read and inwardly digest

as they used to say in school. K & R.

[indepat]

4. Fascist 'pukes have given us much of the worst of the extreme right and extreme left: welcome to the

USSR of A. :P

[JCMach1]

5. A good. ,many of our dem reps are free market pushers of one kind or another as well

maybe it's time to throw them off the boat or convert them.

[Romulox]

6. Are Democrats just going to acquiesce to this massive increase in Corporate Socialism???

Looks like it to me...