Credit Crunch
Kids,
When people abuse George Bush, I shrug.
When they have a go at Palin, I smirk.
When they express fear and anger at the regressive, protectionist and quite frankly ridiculous policies of Barack Obama, I giggle.
But when they criticise the capitalist system, I get angry.
In a nutshell, I’ll say it: the capitalist system is a system of profit AND LOSS.
When you win, you win. When the likes of the “Wall Street Pirates” make trillions of dollars, I’m the first to stand and cheer. But when they lose? They LOSE!
They should lose – if they are are not being careful, if they’re not wise, if they’re not responsible – if they’re running sub-standard business. They will lose. Capitalism giveth, Capitalism taketh away. Why are we having such losses at the moment? It’s simply because people are choosing to move their money elsewhere. People are rewarding those who are currently seen as more risk averse, more responsible, more prudent. They are moving their money away from the “cowboys”. So why the hell should taxpayers prop up bad businesses?
That’s the fundamental difference between an open-market system (like Australia), and the system the US has (which you definitely would NOT call a free market system).
The financial system in the US was built on a deck of cards, subsidised by cheap Fed money and the lack of proper regulation in some ways, overregulation in others, and shielded from analysis and criticism by the US Government, who felt that the complex financial instruments peddled by these companies were “too sensitive” to be adequately scrutinised by the public or Government.
Don’t blame capitalism. Blame the US Government. Legislators in that country are too myopic to be in charge of something as important as the financial markets.
More here: http://www.businesspundit.com/sub-prime/
and here: http://www.dailyreckoning.com.au/
UPDATE: I remembered a piece I wrote last August about this very issue… It’s not far off where we are right now: the F rant: US Dollar Woes
UPDATE 2 [3 Oct]: A great editorial from Ron Paul in The Daily Reckoning.
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