Monday, September 22, 2008

Fetishism of money and crumbling of the state

Fetishism of money and crumbling of the state

Fetishism is assigning mystical qualities to inanimate objects. One such fetishism was when labor was made a commodity. Now we are witnessing money as a commodity wreaking havoc in citizens’ lives.

Many issues are raised, many alarm bells ring. Furious words are used: nightmare, financial 9/11, capitalist doctrine tumbles. Brothers in arms – all central banks of G-8 countries including the sideliner India pitch in to rescue the Uncle Sam’s money woes.

It is a leaking boat this money machine. All the news reports appended to many actors in this machine game, dealing with money as a commodity (fetishism of money). The realization has not dawned on the bureaucrats of the Fed Reserve (Uncle Sam) and US Treasury Secretary that these quick-fixes are not the solution, such knee-jerk reactions to fool the citizens of the world are part of the problem.

Capitalism is founded on money as a measure for transactions including emotional ones such as making love. A viable role for the state is yet to be worked out despite the Keynesian prescriptions, Bretton Woods deals and setting up of ‘systems’ to manage the commodity – money. The market was supposed to be self-correcting and self-regulating. Alas, this expectation was a mirage and now Central Bank of Uncle Sam (called Fed) is taking on roles which will make Karl Marx blush even in a pure communist state controlling command heights of the economy as the state did not wither away.
Now, the state represented by the politico-s is fully in the vortex of the financial tsunami and they will be sucked in since they do not have the wisdom to care for the interests of the common man (cliché, which includes uncommon woman too) who struggle to make a living by making a buck.

Now the buck is unrecognizable as it takes a myriad forms with bizarre words such as options, puts, participatory notes, mutual funds, arbitrage, hedging and what not. These money machine operatives are just playing games with the buck, simply because it is somebody else’s.

The fundamental question is: can an individual or a family trust the ‘system’ to manage the money as a commodity. This fundamental question is at the heart of the question posed about crumbling capitalist doctrine.

I think the currency was invented by accident and not by any long-term vision or design. It just made the business transactions easier. There were times in ancient days when trades would be settled under a towel by finger-gestures secretly settling deals and prices for commodities to be bartered.

As civilization became complex, such simple barters and exchange systems including social exchanges of gifts during marriage seasons or ceremonies proved inadequate. A guy producing cotton wanted to be able to buy a non-existent Nano. It made sense for him to get bucks for his or her cotton produced to be used to buy a Nano.

Nowadays, the currency (or money as commodity) has become a complex web of intrigue and kaarasthan (conspiratorial place) with chamcha politico-s stashing away the commodity in numbered accounts, in exotic locations like Isle of Man or Leichenstein with complex trust deeds making it virtually impossible for any financial regulator or intelligence agency to track the money flows or movements.

It is a dirty, dangerous financial world making a mockery of the age-old system of production of wealth by working hard and producing a revenue-yielding asset.

Now a days, the assets are called loans. What we need is rina-mochan and a tearing down of the system of state borrowing funds, left right and centre from every tom dick and harry. Maybe, the role of the state has to be redefined as a trustee of family holdings, just facilitating the family trust transactions through an enforceable legal system. And, allow the banking transactions to be handled in a decentralized manner by a consortium of family trusts.

Family is an abiding institution, more abiding than the post-french-revolution doctrine of the state as an institution. The state should really wither away and stop dominating the lives of people in a nation. Let the families manage their affairs. The state’s job is to provide national security and that is it. It should not be a taxing, grant-doling behemoth.

A possible solution in the Indian context is to empower the 6.5 lakh gram panchayats one panchayat for every village and confederate them into Bharata rashtram only for the purpose of national security and national defence against enemies of people such as islamist jihadi terrorists or christist evangelist terrorists and some entities engaged in dismembering nations in a global power-game (nuke or no nuke).


Nightmare on Wall Street
Travails lead government to take unprecedented action
By Jed Horowit
September 22, 2008
It took 10 days for Russian revolutionaries in 1917 to overturn centuries of Czarist rule but capitalism works even faster. In just six days last week, the U.S. financial system was turned on its head.
Consequences of the tumultuous events are still unfolding, but — like the Russian Revolution — they are likely to resonate for decades.
For financial advisers, questions range from how to reassure clients that their investments are safe — and where in the world to find positive returns — to figuring out whether their own firms or custodians or banks or all three, in a scenario that's no longer farfetched, will be standing in the same form tomorrow.
Let's take a quick inventory. Over the Sept. 13 weekend, Lehman Brothers Holdings Inc. prepared a bankruptcy filing and Merrill Lynch & Co. Inc. ended 94 years of independence by agreeing to sell itself to Bank of America.
On Tuesday, the government swallowed hard and gave life support of $85 billion to the world's biggest insurance company, American International Group Inc., which is among the 10 most widely held stocks in retirement plans. Also on Tuesday, London's Barclays PLC bought most of Lehman's banking operations — minus its risky assets and liabilities — for the bargain price of $1.75 billion while Reserve Management Corp., the company that invented money market funds, astoundingly announced that the Reserve Primary Fund had broken the buck because of its holdings of Lehman debt (see story on Page 3).
So much for the titans of Wall Street: Lehman, Merrill, AIG and Reserve are all based in New York.
By week's end, the unthinkable had happened — the government, led by Treasury Secretary Henry Paulson, the former chief executive of The Goldman Sachs Group Inc. — proposed a plan to lift billions of dollars of rotting mortgage-backed securities and other bad assets from the balance sheets that have been destroying the banks. He also proposed a plan to provide federal insurance for money market funds.
Securities regulators in Washington and London, meanwhile, slapped a temporary ban on short selling in hundreds of financial stocks, gumming up a time-tested tenet of price discovery in the free-market system and lending credence to the cries of Wall Street bosses who have been scapegoating short sellers for months.
As of this writing, the sustainability of the nation's biggest thrift, Washington Mutual Inc. of Seattle, remains in doubt. The government's plan, however, did provide a caffeine jolt to the markets, which had swooned by nearly 1,000 points in two days last week, and appeared to allay concerns that Goldman and Morgan Stanley, the two remaining giants of Wall Street, could go the way of Bear Stearns, Lehman and Merrill Lynch, all of New York.
To say that advisers, planners, brokers and their clients can now relax would be a giant jump into fantasyland, however. For one thing, the financial industry crisis has finally grabbed the attention of politicians — and that means the almost certain likelihood of simplistic solutions and hastily passed legislation that will have unintended consequences.
It is also far too soon for advisers to take a recess from their own career planning.
The chief financial officers of Goldman and Morgan Stanley vehemently defended their independence last week, claiming that their cash reserves were strong and their funding more than adequate. But without the billions of dollars of leverage provided by hedge funds, money market funds and rival banks that have stopped lending, it is hard to imagine how the investment banks will maintain the fraying golden threads in their bankers' pinstriped suits.
The government's mega-bailout may help restore some confidence, as indicated by the enthusiastic response of the stock market last Thursday and Friday, but the long-term effects on Wall Street and the broader economy are far from certain.
First, while we certainly hope that Washington finds a way to sell its (that is, our) newly acquired toxic debt at prices higher than today's, distressed-debt funds drive hard bargains. The final cost still may be enormous.
Then there is the issue of the appropriate role for government in financial markets.
While Thursday night's proposed solutions may put an end to the government's schizoid and confidence-eroding responses to each day's crisis, they still leave the future big picture unsettled.
Finally, there is the bottom line: How will investment banks profit in today's credit-scarred world?
Their trading and arbitrage machines are rusting, and advisory and underwriting fees are questionable as corporations have stopped calling. Talk still remains about investment banks turning to the monster balance sheets of commercial banks to help finance their daily needs — the approach that Merrill took in soliciting the Bank of America takeover rather than going down the Lehman path.
In light of the most recent events, Merrill chief executive John A. Thain and Lehman's Richard S. Fuld Jr. must now be wondering if they could have plodded forward. Meanwhile, the gnomes of Zurich, Switzerland-based UBS AG, which has written down some $39 billion of mortgage securities and other assets in recent months, must be gagging since they may not be eligible for the U.S. bailout.
The bailouts also don't answer fundamental questions of how to manage the rambling enterprises of global finance. It is difficult to imagine how Bank of America, Wachovia Corp., both of Charlotte, N.C., and other banking giants can profitably integrate complex Wall Street companies into their already vast structures.
Has anyone looked at the earnings statements and loan-loss reserves at New York-based Citigroup Inc. lately? You have heard of too big to fail, but how about too big to manage?
It is tough to explain all this to clients, when the credit-linked roots of the problems are so complex and the government response was for so long so understandably inconsistent. Here is a try.
For several golden years, commercial and investment banks happily minted mortgages and loans to borrowers of all stripes and were content that they wouldn't be holding the loans because the loans had been parceled off to investors as securities. The music stopped when the short-term lenders that had financed the debt lost confidence in the credit juggernaut, and skeptical hedge funds jumped on the bandwagon.
But as Bear Stearns began collapsing in March and regulators analyzed its worldwide network of credit relationships, they knew that things at the center could fall apart. They rushed in with a $29 billion guarantee to JPMorgan Chase & Co. of New York to convince it to absorb the Wall Street firm and its bad assets.
They rescued crippled mortgage agencies Fannie Mae of Washington and Freddie Mac of McLean, Va. And despite Mr. Paulson's harrumphing about the "moral hazards" that federal rescues promote by insuring unfettered risk at investment banks, the government has now agreed to absorb hundreds of billions of dollars of failed assets.
So what, again, do you tell your clients? Morgan Stanley co-president James Gorman and global wealth management group chief Ellyn McColgan took a stab at an answer.
"As always during periods of severe market volatility, we can be of enormous value to our clients by helping them avoid emotional overreactions and stay mindful of the benefits of portfolio balance, diversification and sticking to the long-term plan," they advised in an internal alert to brokers sent out eight days ago as the dimensions of the crisis were becoming clear.
The Morgan Stanley executives also had another thought.
If push comes to shove, they said, remind clients that their assets are far removed from the fate of the firm.
"Client accounts are held in custody far from the firm's balance sheet," they wrote. "If the concern arises, you can assure them that their assets are safe and sound at Morgan Stanley."
The message was cold comfort, said one adviser who shared the memo with InvestmentNews and expressed concerns about Morgan Stanley's fiscal health.
One thing that has changed is that his bosses at Morgan Stanley and at competitors such as UBS Financial Services Inc. of New York, Merrill Lynch and Smith Barney, a unit of Citigroup, are no longer urging brokers to push derivatives and other complex products fashioned by their investment bankers to wealthy investors.
"You can bet clients are insisting on transparency, and we are becoming a much more simple firm," the adviser said. "We won't be offering complex structured investments and pushing them down their throats,"
E-mail Jed Horowitz at

Fed moves focus on Goldman Sachs, Morgan Stanley amid crisis
10 hours ago (22 Sept. 2008, 5 PM)
WASHINGTON (AFP) — The Federal Reserve agreed to allow investment banks Goldman Sachs and Morgan Stanley to become bank holding companies, giving them easier access to credit and help them survive the financial crisis.
The announcement late Sunday completes an overhaul of the structure of the banking industry, which had been broken up in the 1930s into commercial and investment banks under rules to restore confidence in the Great Depression.
Goldman and Morgan Stanley had been the last two independent Wall Street banks, but had been under intense pressure to find merger partners in the face of financial market storm on fears of further collapses in the sector.
The move came as the US Congress considered an unprecedented 700-billion-dollar rescue plan designed to bail out the troubled financial industry reeling under the weight of bad mortgage loans.
The Fed's decision places the last two independent Wall Street investment banks under supervision by bank regulators and opens a wider range of credit to the two firms.
In a statement, the Federal Reserve said its board had approved the applications of Goldman Sachs and Morgan Stanley to become bank holding companies and authorized credit to the two firms "against all types of collateral" that commercial banks can use to get central bank loans.
The Fed also made these collateral arrangements available to the broker-dealer subsidiary of investment firm Merrill Lynch, which was bought a week earlier by Bank of America at the same time that another Wall Street giant, Lehman Brothers, filed for bankruptcy.
The 700-billion-dollar bailout proposal, now in the hands of Congress, comes on the heels of the unprecedented government rescue of giant insurer American International Group and the seizure of mortgage-finance giants Fannie Mae and Freddie Mac, three firms whose failure could likely have led to even more turmoil.
Both Goldman and Morgan Stanley have had access to Fed credit as a "primary dealer" of securities under a temporary program announced by the Fed after the collapse earlier this year of Bear Stearns, another Wall Street firm.
But the opening of this line of credit to non-banks had raised concerns because the institutions had not been subject to the same regulations as banks. Many of the problems of subprime loans have come from what some analysts call the "shadow banking system" which is largely unregulated.
Goldman Sachs said in a statement it would become the fourth largest US bank holding company "and will be regulated by the Federal Reserve."
"We view regulation by the Federal Reserve Board as appropriate and in the best interests of protecting and growing our franchise across our diverse range of businesses," the company said.
Goldman Sachs already has two active deposit taking institutions, Goldman Sachs Bank USA and Goldman Sachs Bank Europe PLC, with a total of some 20 billion dollars in deposits.
Morgan Stanley, which has some 36 billion dollars in bank deposits, said it sought the new status from the Federal Reserve "to provide the firm maximum flexibility and stability to pursue new business opportunities as the financial marketplace undergoes rapid and profound changes."
Some reports said Morgan Stanley was in merger talks with Wachovia, one of the largest US banks, and that China Investment Corp. could take a stake in the company as part of a deal.
Meanwhile, US Treasury Secretary Henry Paulson urged Congress to adopt his financial rescue plan without delay.
"We need this to be clean and quick and we need to get it in place," Paulson said in an ABC television interview Sunday.
The treasury secretary also said the United States was pressing other countries to forge bailouts for their financial institutions similar to the rescue plan.
"I'm also going to be pressing our colleagues around the world to design similar programs for their banks and institutions when they are appropriate," Paulson said on Fox News Sunday.
But while voicing general support for the bailout plan, leaders of the Democratic-controlled Congress said there should be some help for ordinary Americans hammered by the worst housing slump in decades.
Senator Charles Schumer of New York said the rescue was needed but had to be carried out in an open, transparent way and provide some relief for homeowners as well.
"We have to do something about the mortgage crisis, not just foreclosures but the price of housing, which is affecting everyone on Main Street," the influential Democrat told Fox television.
Senate Banking Committee Chairman Chris Dodd agreed that a "clean and simple" bill was necessary, but also called for changes to the proposal to ensure accountability and assistance for homeowners.

Capitalist doctrine tumbles
By Amando Doronila
Philippine Daily Inquirer
First Posted 03:31:00 09/22/2008
…More than averting a global financial crisis, this series of interventions depicted a profound transformation of the global financial system, probably with more far-reaching consequences than the Wall Street Crash of 1929.
Fed stretched to limit
Economists worldwide were quick to note the tectonic seismic shift in the events of the past few weeks. From the interventions of the Federal Reserve, the New York Times noted that the Fed was being stretched to its limits, both in the range of problems it is being asked to fix and in its financial firepower.
“The central bank has also transformed itself almost overnight into The Fed Inc. by essentially taking over American International Group after already taking on hundreds of billions of dollars in mortgage securities to help ailing financial institutions,” the Times said.
“Instead of just setting monetary policy in its ivory-tower-like setting, the Fed now must wear several hats of the insurance conglomerate, investment banker.”
Investor of last resort
The Times quoted Allan Meltzer, a professor of economics at Carnegie-Mellon University in Pittsburgh, who said, “This is unique, and the Fed has never done something like this before. If you go all the way back to 1921, when farms were failing and Congress was leaning on the Fed to bail them out, the Fed always said, ‘It’s not our business.’ It never regarded itself as an all-purpose agency.”
The Times added: “The Fed has often been described as the country’s lender of last resort—the one institution that would lend money when everything else had failed. But by acquiring almost 80 percent of AIG in exchange for lending it $85 billion, and holding $29 billion in securities once owned by Bear Stearns, the Fed is now becoming the investor of last resort as well … But in the past few months, the central bank has transformed itself from a regulator of the money supply to a white knight for troubled financial institutions.”
Other quarters observed a qualitative change in US financial intervention.
Double standard
The Agence France Presse (AFP) noted: “The US criticized the Asian economies for attempting to bail out cash-starved companies during the regional financial crisis a decade ago, yet now throws a lifeline to its companies ravaged by credit crisis.” It said this move “smacks of double standards.”
The move to rescue financially stricken companies, such as AIG, Merrill Lynch, Lehman Brothers, and mortgage giants Fannie Mae and Freddie Mac and investment bank Bear Stearns contrasted with the approach taken by the United States and the International Monetary Fund during the 1997 Asian financial crisis, according to AFP.
The region was told to let inefficient corporations bleed to death.
Shoe on other foot
Raghuram Rajam, chief economist at the IMF between 2003 and 2006, told AFP: “I guess some of the pundits in Washington arguing against government money being used (to bail out local companies) in Asia at the time are now basically for various government intervention.”
Now the shoe is on the other foot. “Well, it’s when it hits you that you realize what other countries were experiencing,” he said. “It’s all very well to say, ‘Let the financial system go. Let it find its equilibrium.’
“But when it is in the face of speculative attacks and prices are being hammered and it looks like the larger institutions are going to collapse, it is pretty natural for the government to step in and say, ‘We can’t let this happen.’”

The financial 9/11
published: Sunday | September 21, 2008

Ian Boyne
"The house of global finance is on fire and everyone is running for the exits, no sure way to turn them around. What's next? The question itself is ominous, because there are no good answers." William Greider, the Nation magazine.
"We've seen crisis. We've seen recession. But we have not seen the core of the financial system shaken like this," the Wall Street Journal on Thursday quoted one investment banker as saying. The collapse of Lehman Brothers, the US$85 billion rescue of American International Group (AIG), the bailout of investment giants Fannie Mae and Freddie Mac, alongside the forced selling of Merrill Lynch, have sent the financial press in a frenzied competition for appropriately dire superlatives.
The usual passing off of these crises of the market and of capitalism as just cyclical - part of the boom-bust rhythm - is simply not credible in this instance. There is something profoundly different and salutary about this latest financial crisis. And something unique about how the United States Federal Reserve has responded.
Writing in the New York Times on Thursday, Allan Meltzer, a professor of economics at Carnegie-Mellon University, who has written a sweeping history of the Federal Reserve, offers: "This is unique and the Fed has never done something like this," in reference to its takeover of AIG.
He continues: "If you go all the way back to 1921 when farms were failing and Congress was leaning on the Fed to bail them out, the Fed always said 'it's not our business'. It never regarded itself as an all-purpose agency."
Earlier, the Fed also had to bail out another Wall Street giant, Bear Sterns, to the tune of $29 billion under the deal with JP Morgan.
On Thursday, the Fed pumped as much as US$105 billion in short-term loans to US banks, while promising to supply a total of $180 billion to foreign counterparts short on dollars. Other central banks also rallied to help market forces, putting, no doubt, bemused smiles on the faces of critics of the neo-liberal economic dogma which is the current orthodoxy.
In an article in its Thursday edition titled 'Abroad bailout is seen as a free market detour', the New York Times says, "In extending a last-minute $85 billion lifeline to American International Group, Washington has not only turned away from decades of rhetoric about the virtues of the free market and the dangers of government intervention, but it has probably undercut future American efforts to promote such policies abroad."
The New York Times says that "For opponents of free markets in Europe and elsewhere, this is a wonderful opportunity to invoke the American example. They will say that even the standard-bearer of the market economy, the United States, negates its fundamental principles in behaviour."
The free-market, Washington Consensus ideologues have finally been mugged by harsh experience. Perhaps now we can have less ideological and more pragmatic commitment to the market.
Time magazine writer Justin Fox, in an article dubbing the US "Bailout Nation", says the bailout of Fannie Mae and Freddie Mac "amounts to a stunning return to Government control over the US financial system, incongruously led by a former Wall Street boss (Paulson) working in what is purportedly a conservative Republican administration."
And remember that in the Asian financial crisis, a condition of South Korea's receiving a US$20 billion International Monetary Fund (IMF) loan was that it allowed the banks and other financial institutions to crash rather than bail them out. AIG's crash, of course, would be disastrous for the world, as it has links in 130 countries and is a pivotal player in this financialised world. But it still leads us to ask: what if the US had to follow IMF conditionalities and the dogma of the Washington Consensus to which it holds developing countries?
What was very interesting was the fact that on Thursday Wall Street ended a volatile session slightly higher, only after a report emerged that the US government was considering the creation of an entity that would take over the banks' bad debts. This is what some in the progressive movement have been calling for some time "socialism for the bankers". Capitalist governments are only too willing to provide bailouts for the rich and powerful while scorning assistance to the poor and raising all kinds of seemingly sophisticated arguments as to why that assistance would create "distortions in the economy".
But the moral hazard argument is raised when big businesses and large financial institutions run into trouble.
Savings and Loans Crisis
During the 'Savings and Loans Crisis' of the 1980s, the rich were rescued (of course, their collapse would have an effect on the poor) and a Resolution Trust Corporation was established. Wall Street clutched at the news that the Federal Government might be thinking of creating a similar institution in light of the present meltdown.
After so many years of bashing government and the role of the state, even hardened dogmatic free marketers have to cling to state initiatives in the face of market failures.
An impressive group of progressive and liberal economists have been attacking the end-of-the-state dogma which has been a feature of neoliberal, Washington Consensus ideology. People like Dani Rodrik, Joseph Stiglitz, Nancy Birdsall, William Easterly and Ha-Joon Chang have done first-rate scholarly work to show that government intervention in markets is crucial to economic successes and social stability. It takes a crisis like this to jolt the free market ideologues back to reality and from their comatose condition.
When the great Morgan Stanley and Swiss bank UBS have to be scrambling for buyers, then you know we are in a crisis. But for years economists have been warning of the dangers of financial liberalisation and the growing financialisation of the global economy. They warned it was artificial, dangerous and fraught with systemic dangers.
The propaganda against regulation by neoliberal dogmatists fuelled irresponsible, imprudent practices in the financial sector. This is what is at the heart of the subprime crisis in the housing market in the United States, which has reverberated all over the world in this era of globalisation.
role of the state
Financial liberalisation has also weakened the role of the state, to deleterious effect (An excellent paper to read is Jomo Kwame Sundaram's 'Obstacles to Implementing Lessons from the 1997-1998 East Asian Crises' published by the Department of Social and Economic Affairs of the United Nations, as well as Robin Blackburn's 'the Subprime Crisis' in the March-April issue of the New left Review).
After the Great Depression - and this crisis is said to be the worst since then - the US Government tightened banking regulations to protect and stabilise the banking system. An important piece of legislation was the Glass-Steagall act which separated commercial from investment banks and prohibited interstate banking. The act also regulated the activities of commercial banks, including interest rates, and also restricted entry into riskier investments.
But the neoliberal theologians and capitalist interests - in the name of enlightenment - lobbied for that act to be repealed. Momentum picked up under Reagan and, interestingly, the Democrats under Clinton completed the revolution in 1999.
global financial assets
In the US today there is a decline in lending to production and trade and a phenomenal rise in paper transactions. In 1980, net interest income was $56 billion compared to $14 billion for financial instruments. By 2005 that was reversed: Net interest income was $270 billion versus $201 billion for non-interest income.
The global economy is badly skewed in terms of financial instruments versus real production of goods.
In 1980, the ratio of global financial assets to annual world output used to be about equal, but by 2005 it was three times larger. In 2007, global financial assets amounted to US$140 trillion, compared to global gross domestic product of only $48 trillion in 2006. Turnover in foreign exchange markets today is a whopping $3.2 trillion a day, compared to the volume of world trade of just $12 trillion a year.
Global liquidity markets last year were estimated at $607 trillion - 12.5 times global GDP. As senior fellow Michael Mah Hui Lim says in a working paper for the Levy Economics Institute ('Old Wine In a New Bottle: Subprime Mortgage Crisis-Causes and Consequences') "We have arrived at a stage where what happens in the financial markets affects, perhaps dictates, what happens in the real economy. It is the case of the tail wagging the dog." Talk about moral hazard!
The world urgently needs a new global financial architecture. Bretton Woods has collapsed. What reigns now is chaos. Financial globalisation is turning out to be a nightmare, and what that insightful and brilliant international statesman and thinker, Michael Manley, campaigned for in the 1970s is even more urgent today - A New International Economic Order. The philistines who opposed him then and now in their abysmal shallowness, and who talked about only putting the domestic house in order, have been exposed for their folly.
A new study just released by the Council on Foreign Relations' Centre for Geoeconomic Studies, Sovereign Wealth and Sovereign Power (and written by Brad Setser, one of the finest scholars on finance) raises worrying prospects for the United States. Its $750 bullion current account deficit - more than 5.5 per cent of its GDP - makes it vulnerable in this global financial order.
The US subprime crisis, the new study points out, "highlights the risks associated with ignoring latent vulnerabilities. Reducing the United States current reliance on foreign governments to finance its deficit should be an important priority for the next president".
And suddenly the US presidential race is dominated by economic concerns - and Barack Obama has been experiencing a surge in the polls as the crisis shows up precisely what is wrong with the Republican party's minimalist Government dogma. McCain has been trying to hijack Obama's platform of Government-as-facilitator, but it is too late.
One hopes, though, it will not be too late for the international community to realise that something must be done urgently to address the crisis in the global financial architecture, which neoliberalism cannot solve but, indeed, has engendered.
Ian Boyne is a veteran journalist who may be reached at Feedback may also be sent to

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