FINANCE: Why everyone owes everyone and no one can pay

Washington Post,January 17, 2010 on page B7: FINANCE:- Worth reading for all insightful taxpayers in particular.

"I.O.U. Why Everyone Owes Everyone and No One Can Pay" By John Lanchester. Simon & Shuster, 260 pp. $25

Much of our current plight, Lanchester argues, comes from lack of competition in the broadest possible sense. The end of the Cold War left the US with no countervailing ideological force to worry about.

With capitalism "unchallenged as the world's dominant political-economic system...it could have been predicted that the financial sector...was in a position to reward itself with a disproportionate piece of the economic pie. There was no global antagonist to point at and jeer at the rise in the number and size of the fat cats; there was no embarrassment about allowing the rich to get so much richer so very quickly." Let us check out the empirical evidence from data for the reality.

As for the bust bailout syndrome that has afficted the US and other economies, Lanchester sums it up in a phrase that could almost be a poetic couplet: "a huge, unregulated boom in which almost all the upside went directly into private hands, followed by a gigantic bust in which the losses were socialized."

Comment: Perhaps such political economy of the private and public sectors as I sent my past blogs may be useful reference for China's socialized system apropos of Sino-American Economics.

Francis Shieh aka Xie Shihao, a lifelong reader trying to learn the happenings of economics in the name of globalization on Sunday, January 17,2010 at 8.38 a.m.