Dollar Steers World Economy into Telephone Pole--
But Is Only One Wearing Seat Belt
Don't start converting to euros yet.
In an ironic twist to the global financial crisis it looks like the the good old greenback is back on top. We got the world hooked on bindles of high risk head rush real estate derivatives. But now that the inevitable telephone pole of reality has jumped in front of the car we have our financial Betty Ford Clinics already built. The rest of the world does not.
We've been there before. FDR and friends had to nurse the financial system back after it had gotten way too high and crashed hard in 1929. The first couple of tough love years that followed saw a third of Americans lose the money in their bank accounts and a 25% unemployment rate. Like today's Europe and Asia they had no net. The FDIC and other "socialist" institutions FDR built to dry out a wasted economy are still in place, thankfully. But the rules that hold the European Union together specifically restrict the kind of emergency "injections" we are giving our junkie banks right now. Their Ad Hoc solutions directly challenge the system which is the basis of their currency. And Asian markets are still learning how to drive the capitalism car out of a ditch. Once again everyone wants dollars.
So we are saved by our own schizophrenia. We tossed out all the rules so we could snort up all the subprime mortgages we wanted, but we never moved out of Mom's house, so she can clean us up and put us back on our feet now that we smashed up the family car. But where does that leave us? Do we go right back on a bender as soon as our strength returns, or stay safe in Mommy's arms?
Greenspan the freemarketeer is humbled now. It turns out you do need some rules after all. And Galbraith the "socialist" is correct to point out that our system of "wealth distribution" is the net that will save us from 1930 happening all over again. But let's hope the bailout doesn't turn us into a lockdown economy, with federal intervention at every step. And let's hope we learned, along with Greenie, that even a free market needs some rules.
http://www.pbs.org/moyers/journal/10242008/transcript2.html
http://www.nytimes.com/2008/10/24/business/economy/24panel.html?_r=1&hp&oref=slogin
http://www.nytimes.com/2008/10/05/business/worldbusiness/05euro.html
http://www.bloomberg.com/apps/news?pid=20601087&sid=aF6npULt3NT8&refer=home
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