It looks like Gordon Brown has convinced the rest of Europe to follow his master plan of bailing out the banks with massive capital injections (i.e. buying shares in the banks with taxpayer money) and measures to improve liquidity (i.e. guaranteeing the banks’ loans to each other with, you guessed it, taxpayer money). Given that the FTSE went into freefall after the British government announced this plan in the UK last week, it remains to be seen how the world’s stock markets will respond in the coming week. Frankly, it’s amazing that anybody’s willing to take Gordon’s advice on anything more important than what biscuits to have in the meeting after the way things have been going recently, but we guess nobody had any better ideas.
With so many of the world’s banks entering into either full or partial state ownership, the question of the day would seem to be: has capitalism failed?
In our opinion, no. Capitalism was doing just fine, it’s the banking system that went tits up. If the politicans had the backbone to stand up to the city wide-boys and enforce sensible regulations on the banking system, we wouldn’t be in this mess. The rest of the capitalist system has its ups and downs but generally keeps chugging along nicely, the problems we’re facing today were caused entirely by the greed and incompetence of The City.
What do you think? Do these events signal the collapse of the capitalist system as we know it? Or is there still hope for capitalism if we can find a way to make the banks work properly?
