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12 Sep 2008Anatole Kaletsky, an associate editor of the Times (London), argues in an article today that the nationalisation of Fannie Mae and Freddie Mac in America represents a ditching of faith in the free market: “just as the triumph appeared to be complete the innermost sanctum of the global capitalist system suddenly collapsed.”
He goes on:
“The nationalisation last weekend of Fannie Mae and Freddie Mac, the two largest financial institutions the world has ever known, signalled the complete failure of the biggest, most dynamic, most innovative and competitive markets that have existed in the history of capitalism – the Wall Street stockmarket and the market for US bonds.
“Their failure has been so obvious, that even the most capitalist administration ever, in the world’s most capitalist country, had decided to wipe out the private owners of its biggest and most important financial companies and replace them with state-appointed bureaucrats.”
Meanwhile, Samuel Brittan, a veteran Financial Times columnist, sounded glum writing yesterday in response to the same events:
“Even if in the end we suffer no more than an average post-second- world-war recession it will still look like a narrow escape owing to the readiness of leaders such as Hank Paulson, the US Treasury secretary, not merely to jettison free-market principles but to take risks with prudence to bail out US corporate bodies. There will be no “glad confident morning” for free-market principles for a long time to come.”
Both writers have a point but they are behind the times. Disillusion with the free market has been pervasive for a while; even among its supporters. For example, see my recent spiked article on the subject (link available on the bar on the left).
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