Why do financial journalists almost universally despise capitalism? The low salaries compared with the people they cover? It has always been a wonder (and an annoyance) to me. The latest exhibition is in the FT, with this pearl of wisdom:
The Cash Room of the US Treasury, with its marbled walls, faux columns and giant chandeliers, was an oddly appropriate place to bury free market capitalism.
For a few minutes all was still, apart from the buzz of the camera crews lined up to film the funeral. The podium stood empty, flanked with two giant flags. Behind it an open door revealed six more flags, as if an abundance of stars and stripes would reassure a troubled nation that the partial nationalisation of America’s banking system was indeed a truly patriotic act.
What a load of crap. Wishful thinking, but crap nonetheless. Was it the finest moment in this countries history of free market capitalism? Most assuredly not, but it is hardly the first time government has been forced to act to halt a panic. From the New Deal (which gave birth to Fannie Mae), to the collapse of Continental Illinois, to the S&L crisis, the US government has intervened when it had to and returned institutions to private hands when practical.
Did free market capitalism die in the 1930s? Almost, but it came back strong after the War and has flourished ever since with a few minor setbacks. The latest episode tested markets and policy-makers like no other, prompting a massive world-wide response. Strong medicine for capitalism, but hardly fatal.
George Bush summed it up best today, calling the measures to restore bank lending and market confidence limited and temporary.
How did they insure it would be temporary? By banning golden parachutes and dividend hikes as long as government holds equity in the banks. The CEOs will shed that equity as fast as they can. Brilliant! And market-based…
