State intervention versus globalization?

State intervention versus globalization?

The demise of the Soviet Union and communism was meant to usher in a new period of globalization and modernity. However, from the Asian Financial Crisis in 1997-1998 to the current crisis within the banking sector of America, we see only one victory. Yes, the victory of state intervention and the good old methodology of state socialism whereby open manipulation and planning becomes the norm. Therefore, is capitalism and globalization an empty fraud or like Mao Zedong like to say, is capitalism a mere "paper tiger?"

Well if we turn the clocks back to the end of 1991 we can remember the dying embers of the Soviet Union. This event was meant to usher in a "new dawn" based on capitalism, the free market, globalization, and other over mentioned "buzz words." The new world was meant to be transparent, open, and a destroyer of over regulation.

Yet open borders, new ways of manipulating the money markets, easy access to international stocks or currencies, modern technology, and a host of other new ways appear to be leading the system in the other way. Because dynamism did not emerge but greater risks did and bad lending ways became apparent within major financial companies, be they banks, investment houses, insurance companies, or other institutions.

Also, new ways like "creative accountancy" became a norm and companies could manipulate their balance sheets. At the same time the much vaunted elite universities ushered in a new generation but just like the older generation, it appeared not to help but hinder a system which had become one big hedge fund. Banks now became "a dice away" from bad credit and financial meltdown.

Of course not all banks, and it is apparent that in America it is the mega-banks which are facing meltdown or huge write-offs. Because smaller banks have remained loyal to the tried and trusted old ways of greater transparency and less risk taking. Another negative shot in the arm aimed at elite universities because the so-called best talent which is nurtured made enormous mistakes.

Therefore, what is the solution to this new financial meltdown? Yes, it is state socialism and the planned economy. Yes, it is the manipulation of markets and tax payer bail outs by the less wealthy to support the mega-rich. Yes, it means tighter regulation in order to control the financial system and stem the globalized tide of anything goes.

In truth, it is a victory for the planned economy, for centralized governments, for state socialism, and for greater constraints to be forced on a moribund banking sector whereby "moribund" only applies to their thinking. The new world order from the start was based on the manipulation of language. However, now it is the manipulation of tax payers money and government bail outs. Therefore, it is clear that state intervention won and let us hope they continue to win; otherwise, we will soon see another financial meltdown.

Lee Jay Walker Dip BA MA