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By Rowan Wolf (about the author) Page 1 of 3 page(s)

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For OpEdNews: Rowan Wolf - Writer

We (the world) have a big problem, Namely that the global economy is crumbling. That crumbling started, and was facilitated by, an ideology that markets (including financial markets) are self-regulating. It is a fundamental belief in laissez faire capitalism. However, the ideology combines with the ranking of corporations as fictive "individuals" and therefore that they should be protected from the intrusion of government in their affairs.

The former belief ties to Adam Smith's theory of the "invisible hand" of capitalism. In its contemporary iteration, this means that people (including the fictive ones) will function within their own self interest, and that self interest includes "regulating" themselves against long term harm.

Over the last quarter of a century, this ideology has been converted to policy and practice. We have seen the removal of regulating mechanisms in the United States. We have seen the tacit, and sometimes explicit, orders for regulators to either look the other way or to accept the self-reports of corporations as fact. We have also seen the creation of global economic system that is focused on placing control in the hands of corporate and monied interests that know no borders.

Certainly in my lifetime, there has been no "invisible" hand. However, there has been one where that hand is deliberately obscured. In other words, every effort has been made to make the markets invisible.

Alan Greenspan, who was Chairmen of the Federal Reserve from 1987 - 2006, played a significant role in institutionalizing this ideology. Therefore, it is significant that in his prepared October 2008 testimony before the Senate Committee on Government Oversight and Reform he stated:

As I wrote last March: those of us who have looked to the self-interest of lending institutions to protect shareholder's equity (myself especially) are in a state of shocked disbelief.

Under questioning regarding his "mistake," Greenspan replied:

I made a mistake in presuming that the self-interest of organizations - typically banks and others - was such that they were best capable of protecting their own shareholders. (see 16 sec YouTube clip)

This "mistake" by Greenspan and many others (neo-conservatives and neo-liberals alike) have led us to a situation which is far from "hitting bottom." George Soros stated that:

"We witnessed the collapse of the financial system," Soros said at a Columbia University dinner. "It was placed on life support, and it's still on life support. There's no sign that we are anywhere near a bottom."

Soros was attending the Columbia University 6th Annual Conference on Emerging from the Financial Crisis Friday, Feb. 20, 2009, sponsored by the Center on Capitalism and Society. Present were other economic luminaries, including Paul Volcker (one of Obama's economic advisers) who admitted "Even the experts don't quite know what's going on." The article also reports:

Volcker stressed the importance of international cooperation in creating a new regulatory framework, particularly for major banks that operate across national boundaries -- the reverse of what's happened in recent years.

In fact, the "experts" are saying "nationalization is the only way out." Therefore, as the stock market declines on fears of nationalization, Obama (and his spokespeople) are announcing that nationalization is not on the table.

Each "expert" points to the sub-prime mortgages as the root of the problem. This is a shorthand for saying a lot of things. Many people are still holding onto the image of undeserving homeowners running a scam on mortgage lenders to get loans they could not afford. In other words, potential lendees scammed lenders. This is clearly not what happened. However, it explains public resistance to Obama's mortgage bailout plans. The reality is that it is the people who got scammed, and that this entire collapse was manufactured. I highly recommend reading Are YOU Listening, Rick Santelli? at Talking Points Memo, where the author details the housing situation (and collapse) in California. She states:

The harsh reality is that the financial community is to blame for not putting a halt to the sale of over-priced homes by just not writing mortgages on them. Not because there was something wrong with prospective homebuyers, but the home sale was flawed. How do you justify inflating the cost of a home by more than 200% in 5 or 7 years? How do you knowingly write a loan for that house? They did it because they could sell confusing mortgage products to customers in need of housing. And it would make the lenders loads of easy money.

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Rowan Wolf is an activist and sociologist living in Oregon. She is the founder and principle author of Uncommon Thought Journal, and a Senior Editor for more...)

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