Economic Meltdown

The last few weeks have tested the greatest economic minds to their limits. What chance my feeble one to make any sense of it all?

I am beginning to come to a few conclusions, however. Firstly, it is hard to see how even the most right-wing, laissez-faire economics advocate can maintain such a position given recent happenings in world economics. George Bush's government is having to spend what might end up being a trillion dollars of taxpayers' money to shore up the US economy, on which the world relies. Henry Paulson, US Treasury Secretary, former Chairman and CEO of Goldman Sachs, that is to say, arch-capitalist extraordinaire, is the architect of the plan.

If you were to suggest giving away $3,000 per head of US population to rich bankers, paid for by taxation, people would say you were mad. But that is exactly what Henry Paulson is suggesting. Not only is the US government planning to take on all of the Toxic Debt, they are planning on doing so in such a way that is highly favourable to the owners of that debt. So favourable, in fact, that it is in the interest of a bank that has dealings in the US to have such debt, since they will make a profit on it.

The only justification (and it is a scant one, in my opinion) for large profits for banks and bankers is the level of risk. Risk that they could lose all of their capital. But where is the risk if the US government bails out the banks? Where is the risk to the bankers' personal wealth?

If I were a US taxpayer, I would want to know where my $3,000 is going, how it will help me, and how it can be used to my benefit. I would also want to know how the money was going to be clawed back from rich bankers who are destroying the world economy by their greed.

I would want to know what mechanisms are going to be put in place to ensure that large financial institutions become incapable of making vast profits from what is essentially defrauding Joe Public.

I would want to know how the government was going to chase those who made immoral cash from the financial system to ensure that no-one profited personally from this debacle.

I, for one, will never be able to look at an investment banker again without scorn and hatred. No-one has a right to be rich. No-one deserves to be rich. Capitalism is not meritocratic. The rich are rich at the cost to the poor.

Don't get me wrong, I'm not anti-capitalist; but neither do I believe capitalism is self-justifying; nor that those who are at the heart of it are the most worthy of the wealth that is generated.