Keynesianism now a good cat for US economy
With the passage of the massive bailout legislation by the USA House of Representatives, Keynesianism is now back to America with a big bang. As Deng Xiaoping once famously said, it does not matter if the cat is white or black, it is a good cat as long as it catches the mices.Ideological implication of US financial bailout
posted by James Wong Wing-On at 12:10 PM
1 Comments:
This massive government intervention is inevitable, but its really not sufficient - many other steps need to be taken by US authorities to put their house in order.
Leaving it to the market won't work, or will result in a long and deep global recession, even depression before it recovers.
I'm still amazed and angry how the greedy first lenders were allowed to securitise the sub-prime mortgages and sell them off to institutions all over the world. These were essentially loans made to people who have a high risk of not paying back - people with insufficient or unsteady income, poor credit records, or already in debt.
If a businessman wants to risk his own capital in this type of business, he is welcome to, but he shouldn't be allowed to ask the public to share his risk without making it clear the nature of the risk.
The US government bears part of the blame from years of deregulation, some of it now seen to be unwise. Not all regulation is bad.
By the way, Ah Longs and Chettiars do sub-prime loans all the time, but their interest rates are exhorbitant and they have creative ways to recover their money. Most importantly, they are not risking the public's money on their loans.
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