Website review: RGE - The Staggering Fiscal Costs o...
laodan discovered this in Economics
•1 reviews since Feb 28, 2008
economics
•rgemonitor.com/blog/roubini/246724
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laodan discovered 3 months ago- The Staggering Fiscal Costs of Bailing Out a Financial System in Crisis in RGE Monitor by Nouriel Roubini
The wise Wolf is himself - at the end - very aware of the political economy of a financial system where in good times the profits are privatized and in bad times the losses are socialized. This is not a politically sustainable regime. As he correctly puts it: "This is not a crisis of 'crony capitalism' in emerging economies, but of sophisticated, rules-governed capitalisms in the world's most advanced economy. The instinct of those responsible will be to mount a rescue and pretend nothing happened... Worse, the institutions that prospered on the upside expect rescue on the downside. They are right to expect this. But this can hardly be a tolerable bargain between financial insiders and wider society. Is such mayhem the best we can expect? Is so, how does one sustain broad support for what appears so one-sided game?" This is indeed a one-sided game where financial insiders privatize profits while the massive losses of their reckless behavior - searching dangerously for yield, gambling for redemption, being subject to distorted incentive not to monitor their lending and risky investments - are systematically socialized during a crisis. This is actually 'crony capitalism' of the worst kind, as bad as the one that plagued emerging market economies and led to their severe financial crises in the last decade. The Staggering Fiscal Costs of Bailing Out a Financial System in Crisis requires registration (FREE) Why Washingtonu2019s rescue cannot end crisis story The globalization of modernity, that has been imposed since the seventies on the population of the world by Western big capital, is now concluding in front of our eyes with a worldwide rebalancing of economic power: - the US economy is choking under debt and will take years to digest its financial losses. After re-emerging it will look vastly different and weaker... - China will suffer high losses of its own as collateral damage from the American financial implosion but its economy will continue to grow at a fast pace driven by its internal market. China saves approx. 40% of its national earnings and those savings... - Europe will undeniably also suffer from the US financial implosion but the savings of its citizens are still high and its internal market is the largest of the world.... From the present US financial implosion will emerge a new "economy world" and a new worldview...
- The Staggering Fiscal Costs of Bailing Out a Financial System in Crisis in RGE Monitor by Nouriel Roubini
