Guardian UK: A deluded Wall Street threatens the world economy

[marmar]

A deluded Wall Street threatens the world economy
Will Hutton The Observer, Sunday March 16 2008


If you'd been in Volare restaurant in downtown Chicago on Monday night, you would not have thought a US recession was imminent; the place was packed, as, earlier, was most of Michigan Avenue, the principal shopping street, despite the freezing winds.

But that was before Friday as news spread of the collapse of Bear Stearns, America's fifth largest investment bank. A mounting financial crisis threatens to undermine the economy that supports, among many others, the clientele of Volare. The United States is about to be trashed by perhaps the greediest, most arrogant, self-deluding financial class in the country's history.

It is an epic tragedy whose ramifications are bound to impact on Britain and the rest of the world, beginning with the sanguine economic assumptions - of only the mildest of economic slowdowns - that underpinned Alistair Darling's Budget forecasts last week. But whether in Britain or America, politicians and policy-makers seem frozen into inactivity (with the honourable exception of the US Federal Reserve, America's central bank). Messrs Brown and Darling echo President Bush and US Treasury Secretary Hank Paulson; as little as possible must be done to regulate or impede the operation of the titans of Wall Street and the City, whatever their recklessness. Even Hillary Clinton and Barack Obama, slugging it out for the Democratic presidential nomination, are happier to talk about the threat to American jobs from foreign trade than the mortal threat constituted by an out-of-control and broken financial system.

Yet to blame foreign trade for America's ills is both stupid and wrong. The untold story of our times is of US industry not just holding the line but expanding production, a phenomenon gathering pace as the dollar plunges on world markets, promoting super US competitiveness. American brands and companies increasingly populate the world top 100 and the US invests stunning sums on its knowledge economy base - software, universities and R&D. ......(more)

The complete piece is at: http://www.guardian.co.uk/commentisfree/2008/mar/16/creditcrunch.useconomy

[El Pinko]

1. This article basically advocates government price controls on real estate.

We all know how badly that worked with smaller commodities - I can only imagine what a price floor on housing might do to our economy.