We live in bizarre times… What is one to make of news items such as these:
Federal Reserve Chairman Ben S. Bernanke warned that a fiscal stimulus won’t be enough to spur an economic recovery and that the government may need to buy or guarantee banks’ tainted assets to revive growth.
“Fiscal actions are unlikely to promote a lasting recovery unless they are accompanied by strong measures to further stabilize and strengthen the financial system,” Bernanke said in a speech today at the London School of Economics. “More capital injections and guarantees may become necessary to ensure stability and the normalization of credit markets.”
Bernanke wants more and more involvement of the Govt in private enterprise: AP
The government has already lent the embattled bank [Citigroup] $45 billion — more than other big banks have received — and agreed to absorb the losses on a huge pool of mortgages and other assets.
CEO Vikram Pandit has been saying for months that he plans to sell assets to raise cash, but many investors believe Citigroup is headed for a larger-scale break-up now that the government is involved.
“Pandit’s a puppet now. He either goes along with what the government says, or he’s out,” said William Smith at Smith Asset Management, who still owns shares of Citigroup. “The new CEO of this company is the government … Now that the government’s the biggest shareholder, you finally have an activist.”
In other words, when the government gets financially involved, it takes tax payer money and invests it on the condition that it takes an ownership stake and has a say so in how the corporation is run. This is nothing but nationalization in its purest form. Countries with large degrees of nationalization in their economy, be they communist, socialist or even capitalist have shown over and over again that that sort of economic model is a failure. Meanwhile, everyone is jumping on the bailout bandwagon, even game makers.
Meanwhile, in other news… AP
Hong Kong has been named the world’s freest economy for the 15th year in a row, according to an annual report released Tuesday by the conservative Heritage Foundation and The Wall Street Journal that warns against government intervention amid the global economic crisis.
The Chinese territory, known for its low taxes and looser regulations, was followed by Singapore, Australia, Ireland and New Zealand, according to this year’s Index of Economic Freedom.
European countries again accounted for half of the top 20 economies considered free or mostly free, with Switzerland at No. 9 and the U.K. at No. 10.
However, the U.S. slid one notch to sixth place, dinged for increased government spending and tax revenue as a percentage of gross domestic product, one of the survey’s authors said.
and the clincher:
While free-market policies have been widely criticized for precipitating the current global financial and economic crisis, the report’s authors defended free capitalist systems and argued against massive government as a threat to growth.
“Yes, there may be temporary ups and down, but in the long run more economic freedom leads to more wealth for more people than any other system,” Edwin Feulner, president of Heritage Foundation, a Washington-based think tank, told reporters in Hong Kong.
“There is no escaping the fact that the freer the economy the more it flourishes,” he said.
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