American economy has been in news recently and it is watched very keenly by the bankers, economist and traders across the globe. Recently we have been hearing lots on interesting news from that part of the world and most of the news indicate a crisis. Two day back there was news of bail out of insurance giant AIG by Fedral bank, just before that Lehman Brothers went bankrupt. The Meril Lynch sale to BoA and take over of Bear Sterns by . There is intresting pattern which emerges out of this scenario, AIG bail out by Fed with a package of 85 B US $ making them biggest shareholder of AIG is of larger significance. These are the steps taken by capitalist nation in rebublican regime. Even in the previous occasion we have seen the Bear and Sterns
take over by JP Margan Chase brokered by Fedral Bank, show socialist inclinations. These were necessary steps to preventas AIG is too big a company and its collapse would have effected at reatil level are reasons stated by the officails of the Fed Bank. However the point to note is that, it is the Tax payers money which government is using for poor decisions taken by the these companies execitives.
American Fed Bank has used every oppurtnuity in last 2 decades to their benefit whether it be Financial Crisis faced by East Asian Counties in 1987 or debty default by Soveit Union leading to collapse of LTCM Hedge Fund or dot com bubble to advance its policies for liberalized market regualtions and globalization of risk. The so called securitization revolution leading to creation on innovative financial instruments like mortgages based on securities has spread the crisis to every department of financial market. The privitazization of social security funds and allowing the private institutions to manage huge sums have led to the crisis become so huge that it is endagering not only American economy but also the economies in the other part of world. The creation of this new fianancial world using the information technology to create new product, where the risk is trasfered to point where no body knows where risk come from and where it rests with; is bound to touch the lives of millions of ordinary people.
The American capitalist systems has pushed the ideology of the free capitals marketsto its limits and have stereched the partical boundaries corporate financial markets to theoretical heights where it was no longer possible to sustain. Welcome to world of poor corporate decisions, disgusied and weak balance sheets, risky assets, faulty valuations and wrong debts. This is story of greedy traders using the systems often with political support to remove the barriers in the forms of regualtions made to save the hard earned money of ordinary citizen. And the conlusion of the story is that the American goventment is cleaning the past sins of these greedy traders by guaranteeing their outstanding debts