Sunday, Oct 26, 2008
From the 1945 UK Labour manifesto Let Us Face The Future
ICH: Down For The Count "The whole system is contracting"
"The great inter-war slumps were not acts of God or of blind forces. They were the sure and certain result of the concentration of too much economic power in the hands of too few men (who) felt no responsibility to the nation."
The US Treasury and Federal Reserve are now underwriting the entire financial system. The free market has been abandoned altogether. Everything from commercial paper to money markets is now backed by the "full faith and credit of the United States". Without that explicit government guarantee, the credit markets would still be frozen and the system would crash.
Foreign investors and central banks are no longer providing the capital to support the US $700 billion current account deficit. They have lost confidence in America's ability to bounce back
2 Comments
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1. dohousescrashinthewoods said...
I'm developing an opinion that we should clarify and simplify government's role because at the moment it is a boundariless spaghetti.
This would make everyone's lives easier - people, business and overworked politicians who can't think straight for firefighting.
Does anyone else think there is mileage in this approach?
Government should provide a solid foundation of services for society and business to grow on and it should not get mixed up in the stuff built on that foundation. Government should not intermarry with businesses or personal lives.
To use a gardening analogy, government should provide compost, weeding and watering so that gardeners (people and businesses) can plant and tend their work. An IT analogy would be that, they should run the servers, not the applications.
That means, for example, providing education, health, policing, infrastructure and some level of support to give the poorest a chance without doing it for them. It likely means an end to invasive prescription for personal lives, less effort on "health and safety", less control of what everyone does (huge cost savings) less snouts in the trough with big business and a proper focus on, for example, building infrastructure rather than houses.
It also means providing honest, accurate information/statistics so that those building on the platform can make clear and reliable decisions without second-guessing.
Markets can develop where the platform supports them. It is government's responsibility to build a sustainable platform, period. That doesn't mean it's easy, but it does mean it's clear what is in scope and what is outside the remit.
2. Fjcruiser said...
The two roles of governments are to provide infrastructure and protect its citizens (externally from wars and internally from establishment of monopolies run a profit centers). Anything else, is called mismanagement.
The first step into solving the crisis is reviewing the role of government in societies.