Friday, October 03, 2008

Good As Gold


The international dimension to America's financial-sector meltdown is beginning to surface. Banks around the world have had to take multi-billion dollar write downs on bad American securities holdings - and these banks and their governments are anything but pleased. It's as though the United States had been caught writing bad cheques or pushing counterfeit money.

This is no small matter when any nation "financializes" its economy, which is to say moves away from production (manufacturing/agriculture) and more heavily into banking/securities/insurance. For the past twenty years the largest component of the American economy has been its financial sector. Trust is the name of the game when you're playing that one and confidence in America's financial institutions and its government regulators is in the gutter right now.

This is the same United States that,for decades, infuriated smaller nations around the world by lecturing them on their fiscal sins whenever it got a chance. Now those little people are doing a bit of scolding of their own.

The era of "what I say goes" may have up and went for America. Increasingly there's talk of multinational financial regulation - global baseline standards for securities, currency and lending. International oversight and regulation. Some are obviously relishing the opportunity to rub Washington's nose in the mess it left on the floor. A part of it, however, is plainly warranted. Friends don't let friends drive drunk, so to speak, especially when we have to ride in that same bus.

America's freewheeling days may be coming to an end. The era that featured the Savings & Loan scandals, the Dot.Com and housing bubbles and Enron/WorldCom and the subprime/derivative fiasco could just be over.

If the United States was still the world's largest creditor nation (as it was when Reagan took office) instead of the world's largest debtor nation (as it has been since before Reagan left office) it would all be so much different, but it's not and it is.

An international regulatory regime might do a lot of good for the United States - and for several other nations. America's most bitter critic at the moment seems to be Russia which, itself, could use a thorough regulatory housecleaning. There is growing support among many European states for the multinational approach.

Many Americans, of course, have a religious phobia about what they see as the devil's work - covert efforts to create a "world government" and this sort of initiative will be seen by them as proof that Satan lives. This is grounded in another mass delusion - American exceptionalism - a subject of a number of excellent papers, books and studies. This xenophobia reaches all the way to Pennsylvania Avenue and is alive and well on Capitol Hill and the White House. Oh the Rapture hounds are going to love this. (By the way, Sarah Palin thinks she's going to meet Jesus in her lifetime)

Fifty years from now the history of this Reagan to Bush II era will be written and it's probably going to look like one of the strangest periods in history. A Bacchanal of fiscal recklessness and chicanery on a scale of nothing ever seen before. An outright raping and pillaging of a nation's wealth, power and promise from within, conducted by rightwing oligarchs manipulating the levers of power to benefit a very elite class of the ultra-rich to the grave detriment of their people and their nation.

But this Greek tragedy isn't over yet, far from it. As John McCain said (shamelessly plagiarizing Winston Churchill) the bailout isn't the beginning of the end of the meltdown, it's merely the end of the beginning.

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