March 31st 2008

March 31st 2008 - March 31st 2008 The emphasis on...

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March 31 st 2008 The emphasis on privatization, deregulation, liberalization of trade (Reducing tariffs on imports), and if we look at them individually, there is nothing objectable about them. A problem came though as a result of the dogmatic way it was implemented in; the United States, the major economy in the world, has never really had effective regulations over its financial system, which has lead to a series of disasters. Over a thousand savings and loans went bankrupted in the 1980 because of a variety of reasons, and the government had to compensate. The US spent 124 Billion dollars repaying the people; private companies because of their screw ups had to pay a lot to the public. Enron- went bankrupt in 2001, took advantage of NY state law on electricity. Bayer-Stern: collapsed because of the sub-prime reserve crisis. Federal Reserve stepped in for the bail-out. The US tax payer winds up having to foot the bill; private companies work on the principle of privatizing the gains, and socialize the losses. These kinds of bail outs violate the principals of monetarism government intervention. Sub-prime mortgages occurred as a result of lack of regulation; operation of free markets sounds good in theory, but in reality private companies will not always make decisions that are beneficial to the market, the people or themselves in end. One of the lessons of the 20 th century (the great depression in particular) is that government is needed to balance out private power and prevent financial disasters from happening. In the 1980’s and 90’s, the US, IMF and the World Bank represented a united front in
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March 31st 2008 - March 31st 2008 The emphasis on...

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