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Wednesday, September 24, 2008
The end of American capitalism as we know it?
This looks ominous. “The World As We Know It Is Going Down.” That’s one of the headlines in Germany’s Der Spiegel newspaper. It refers to the writer’s view that the U.S. financial crisis is signaling an end to U.S. capitalism as we’ve known it.
“The only thing that is certain is that the era of the unbridled free-market economy in the U.S. has passed — at least for now. The near nationalization of AIG, America’s largest insurance company, with an $85 billion cash infusion — a bill footed by taxpayers — was a staggering move.”
Another article in the same newspaper says that the rest of the world shouldn’t have to bear the burden for America’s lapses. U.S. Treasury Secretary Henry Paulson is asking other countries to help buy up bad U.S. debt. The U.S. government is putting up $700 billion in taxpayer money in the hopes that the measure might restore stability in the financial system. Some countries are planning to help. But the German government has answered this call quickly and clearly: no.
The article quotes various German economists who are critical of the American rescue package for a number of reasons. Some don’t believe the plan is a well-balanced one, arguing that the government is only buying bad risks and, in doing so, nationalizing the losses. Other say the U.S. government should be more focused on passing regulations so that this type of crisis never happens again.
No matter what, many Europeans feel that — since so many of America’s bad loans were sold abroad — they’ve already had to bear enough of the burden.