The story in the Sydney Morning Herald begins as follows:
KEVIN RUDD has denounced the unfettered capitalism of the past three decades and called for a new era of "social capitalism" in which government intervention and regulation feature heavily.
In an essay to be published next week, the Prime Minister is scathing of the neo-liberals who began refashioning the market system in the 1970s, and ultimately brought about the global financial crisis.
I have to agree, at least in part. The economic experiments of the past 39 years have, indeed, brought us to this current crisis. There is no question of that. With currency tied to nothing more than the promise that the government won’t print too much of it, there are few, if any real limits on things. Rudd’s answer for that: Regulate! His notion is that heavy government regulation can curb the extremes while allowing a robust free market to exist. My question is this: How?
The Main Ingredi... [Read Full Article]
The headline was clear and to the point: Economy Shrinks at 3.8% Pace in 4Q. Now the good news was that this wasn’t as bad as all the economists were predicting. The bad news is that all of them see that pace increasing to as much as 5% shrinkage by summer.
According to Mark Zandi, chief economist at Moody's Economy.com, “The downturn is intensifying. The fourth quarter is worse than it looks.”
Sounds ominous. Throw in growing unemployment, tighter credit, states and even whole countries on the verge of bankruptcy and you can see why things are predicted to get worse before they get any better.
Small Banks and Small Business
On the other hand, we have this headline as well: [Read Full Article]
Did I miss something? I mean, wasn’t all this money supposed to help the economy, protect jobs, ease foreclosures and clean up the sub-prime mortgage mess? Wasn’t all this spending supposed to build confidence in the financial system and break the logjam in credit? Yet here we are, $350 billion into the bailout—and that is not counting the billions that had already been spent to bailout, stimulate, rescue (or whatever other verb you wish to insert)—the economy and so far, here is what we have to show for it:
The highest unemployment in 34 years and more to come
A whipsawing stock market in a downward spiral
The credit logjam is still entrenched
The threat of deflation
Problems finding venture capital for start-ups
The auto industry begging for a piece of the pie
Companies changing their businesses to qualify for a bailout
Little consumer or investor confidence
Really ticked-off taxpaye... [Read Full Article]