And here in the USA, the meltdown on Wall Street dominates the news. Friends (lawyers, bankers, software and hardware people) who know something about the goings-on -- which I don't -- are uniformly critical of the unbridled "free market" that they think has caused all this. (One said "free market", then stopped and corrected himself, saying he really meant "wild market"). Among many other things, the free and easy mortgage practices of recent years, which has left millions with loans they can't repay, taken from financial institutions that threw any notion of due diligence to the winds. Too, there's been fraud and corruption and great greed. And it's built a vast house of cards that is now crumbling.
So many questions. In no particular order, and not necessarily as well-formulated as I'd like, consider a few.
* Can a country survive indefinitely on enormous levels of debt?
* Are we therefore now watching the decline and fall of a great empire, as Paul Kennedy predicted nearly 20 years ago?
* As ever-more Indians move to living in debt, should we be worried?
* What is the meaning of a massive government "bailout" to rescue the financial system, to rescue financial institutions -- even if it has been rejected by lawmakers? Is this not a fundamentally socialist measure?
* In essence therefore, how does this differ from India's now-reviled move to nationalize banks in the '60s?
* If certain individuals and institutions choose to take risks and get into trouble, even massive trouble, why shouldn't they sink? After all, isn't risk and its consequences -- possibly great rewards, but just as possibly great disaster -- fundamental to capitalism and free markets?
* Is greed an Achilles heel of capitalism, just as the absence of individual incentive was an Achilles heel of communism?
* Is this therefore the fall from grace of capitalism, just as the late 1980s were the downfall of communism?
Finally, it seems to me that so much depends on human psychology, even individual psyches. I mean, I know that as markets plunge, my own savings are vanishing into the ether. My instinct is to cut my losses and cash in those savings. Yet I know that if I follow that instinct, I simply accelerate the slide. Now maybe I can afford to resist that instinct, at least for a while. But how many others can resist?
What happens to the man looking forward to retirement next year, watching his retirement account melt away? What's he going to do with his instinct? Multiply that by millions of people. Mix in the likelihood that eventually Americans will realize they cannot pay back the vast amounts they owe. Sprinkle on top the anxiety of investors in the American economy, pushing them to look at investing in, let's say, Europe and its euros.
What do you have now? Among other things, you have a manic Monday, when the Dow sank 777 points.
October 01, 2008
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Your post reminds me of the reflexes of our desi comrades. The Soviet Union, early on in its life, was indeed a bit of an achiever. Great progress in science and technology. First man in space. Economic disparities visibly far less than in Western nations. Cheap heathcare for all. Almost 100% literacy. Etc, etc.
Our comrades lapped this all up, and proclaimed socialism a winner, and predicted doomsday for capitalism. Never mind that the soviet communists had their hands dipped in pools of human blood.
Decades later came the denouement, and what do you think our comrades said? That communism was a massive failure? That not only did it fail to deliver the utopia it promised, but that it actually ended up genociding millions?
No way! They don't admit that to this day!
Hence, caution, and my friendly recommendation: instant punditry must be eschewed.
Point to ponder: what did friends, lawyers, bankers, software and hardware people attribute their wealth to when markets were going up, up and up?
Who is aikath?
Who is aikath?
Not answering the questions posed to you and going on about something else on a tangential note--at best--expresses your lack of argument.
If economists, intellectuals, bloggers worldwide term this socialisation in the world's most advanced democracy, that surely is not instant punditry.
And friends, lawyers, suchlike would attribute both their rise and fall to the markets, btw.
I couldn't have said it better:
Also, Somu/Aikath, why are you addressing yourself? BTW, are you Somu, or the Punjabi-ised version of Sumo? Just curious.
Sorry, was without web access for a few days and just got back. Nazim, thanks. your last sentence says just what I would have said. Most of the bankers/lawyers etc I referred to are relatively sanguine (in the circumstances) about the mess the economy is in, and are able to see it as just the downside of the same cycle that also brought them wealth and success. Not everyone can be as sanguine, I know, but it makes sense to see it that way.
There's a point to be made, though, about this nationalization/socialism stuff. This whole financial package is meant as a temporary (if huge) prop up of the economy. Assuming that same cycle goes around (likely), and assuming the banks/institutions that get a leg up manage to survive (who knows), they will not remain propped up; they will not remain "nationalized" in the sense India's banks remain nationalized 40 years after it happened.
Yet it is an interesting question to ask. Those same bankers/lawyers are asking it and wondering about its implications.
my thoughts exactly
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