Stephen Roach, an economist from Morgan Stanley that I respect greatly, wrote a good opinion piece in the financial times yesterday questioning the reappointment of Ben Bernanke. His main point is that, like Greenspan, Bernanke was partly to fault for the runup in housing prices and subsequent fall of all assets tied to it, so why is he being touted as a champion for “saving the world”?
I would like to broaden this approach a little bit further to my own opinion that somewhat falls in line with The Shock Doctrine written by Naomi Klein. Her approach was more along the lines of using war to expand government. I think the bigger demon in the system is the use of financial crisis to expand the government. The government has allowed massive financial institutions to reign unchecked and able to borrow at extremely cheap rates (free money) for nearly two decades. The banks got reckless and the government did not provide adequate oversight which subsequently caused a systemic crash in the financial markets. The government responds by saying it is absolutely necessary to expand their monetary/financial institution control systems while funding bailouts and stimulus in order to save the entire global financial system from utter collapse, thereby increasing the size of the government in general. It is as if you get a promotion for doing a terrible job in the first place…
All a government needs to do is create mayhem in order to grab more control. How would you like to run an organization that is capable of causing disasters, printing your own money or collecting more money via taxes (no budget), while controlling a military power that is the strongest in the world? Where exactly are the checks and balances in this system? How can I, as a citizen, demand that my currency not be destroyed and that my income not be cut in half or more via taxes and inflation? I want to work for myself and for our country’s infrastructure, education and defense…not for the corrupt who are in control of the financial house of cards.
"Naturally the common people don’t want war. But after all, it is the leaders of a country who determine the policy, and it’s always a simple matter to drag people along whether it is a democracy or a fascist dictatorship, or a parliament, or a communist dictatorship. Voice or no voice, the people can always be brought to the bidding of the leaders. This is easy. All you have to do is tell them they are being attacked, and denounce the pacifists for lack of patriotism and for exposing the country to danger. It works the same in every country.” --- Hermann Goering, Hitler’s Reich Marshall, at the Nuremberg Trials