Esoteric Dissertations from a One-Track Mind

November 12, 2007

More Market Turmoil

Filed under: economy, politics — Tags: , — codesmithy @ 9:31 am

The Asian market took a dive.  Basically, they are reacting to fears of a downturn in the U.S. market and financial system.  Mike Whitney exclaims “The Fed Has Wrecked the Stock Market.”  Whitney points to much of the same data I do and his conclusions are similar, but I have a harder time completely blaming the Fed for the situation.  The Fed was stuck between a rock and a hard place and eventually screwed by the moral hazard caused by speculation and deregulation in the financial sector.  This is a typical consequence of “Laissez-faire” capitalism.

What I find to be the most depressing aspect of it is the grass roots political movements like Ron Paul want to follow the “Chilean Miracle” model of economic restructuring: more deregulation, less social spending, more privatization.  Chile is the 8th most unequal society in the world, but I’m sure the U.S. can beat that if we try.  Although, to Dr. Paul’s credit, he is not a fan of so-called free trade agreements.

Noam Chomsky looks at the political system in the U.S. and gives his insights on why “character issues,” trump economic policy.

And on a final note, Dr. Paul does ask the Fed chairman about the economic consequences of his policies

I think there is little disagreement on what the problems are, however, I think Bernanke takes foreign interest in U.S. assets too much for granted.  If the dollar is no longer the world’s reserve currency (basically because it is needed to purchase oil), U.S. Fed and financial market manipulation will not be nearly as powerful as it was before, and China is threatening to get the ball rolling on that front.


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