Another Anglo-American debacle. This time worse than Iraq.

Hank Paulson, President George Bush’s Treasury Secretary,  launched a unilateral plan to save the western banking system last Sunday, then appealed to western governments to bail out their own banks.

‘Fair enough’ one might say.  After all,  the US’s staunchest and most compliant ally, Britain, actively colluded in the build-up of these massive, and now unpayable, Wall St. debts, and British banks will likely benefit from the bail-out.

European politicians, with the exception of Spain, declined to party at the Anglo-American-sponsored  Credit Bubble saloon. It was Anglo-American financiers cheered on by politicians and regulators, that dined out on a ‘punch-bowl’ of de-regulatory excess. Europeans individuals and households are on the whole, far less indebted than than those in economies that emulated the Anglo-American model. Now that the party is well and truly over, there are pleas for help from Washington.

Hank Paulson on Sunday signalled the need for a multilateral approach to the crisis, which thanks to a highly integrated, international financial system – threatens to become a global systemic crisis.

But in one week the world has changed.  The same politicians that Donald Rumsfeld mocked as ‘old Europe’ because they opposed the invasion of Iraq, are now refusing to play ball.  The New York Times reports today that German Chancellor Mrs Angela Merkel “took the opportunity to criticize the United States and Britain for opposing German efforts to put greater regulation, or at least reviews, of the financial sector on the international agenda last year, when she was chairwoman of the Group of 7 industrialized nations.”

We can be pretty certain that Britain’s Labour government, led by Gordon Brown as Chancellor,  stoutly represented the reckless gambling interests of the City of London, and lodged the loudest objections to a discussion of ‘greater regulation’ at the G8 Summit in 2007.  Unfortunately James Naughtie in this morning’s interview with the Prime Minister, failed to challenge him sufficiently strongly as the Prime Minister spun his way out of the ‘light touch regulation’ attack, insisting that it had never been ‘soft touch’ regulation.

You could have fooled me.

But while plans and policies for the de-regulatory party were hatched in Britain by Messrs Hayek and Friedman and their Conservative friends – ranging from Heath to Thatcher to Blair and Brown  – Britain’s new Chancellor, Alastair Darling, is refusing to rush to Mr. Paulson’s aid.  Subdued, he addressed the Labour Party Conference yesterday on his “belief in the role of Government” and suggested very gently, that we may need to “strengthen global supervision” of the finance sector – after a galloping herd of horses has bolted, to quote Robert Peston.

Mr Paulson must feel pretty miffed at the disloyalty of a fair-weather friend. It seems times they are a’changin’ and the old trans-Atlantic alliance just ain’t what it used to be.

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5 comments to Another Anglo-American debacle. This time worse than Iraq.

  • john fletcher

    There has been little or no MSM coverage of this, but at the moment there is a massive grass roots email and fax and telephone campaign

    going on against the Paulson bailout plan.

    I suspect that the growing opposition within Congress to the plan is mainly fired by this

    extremely unusual mass campaign. Legislators are perfectly used to being bombarded by mass and identical emails from groups such as the NRA. (Its

    called Astroturfing – articifical grass roots!) But this is very different. All the emails are different and original and obviously come from

    individuals who care passionately about the situation America finds itself in.

    For details of how to join the campaign – for American

    citizens – go to:

    http://tinyurl.com/3jsx3k

    (PS. Hi, Ann. Great campaign! Keep steaming on!)

  • ann

    Thanks for this news and link John..Warms the soul…aren’t the people great?

  • john fletcher

    Independent Vermont Senator Bernie Sanders’ Petition Against Paulson.

    Dear Secretary Paulson:

    As a representative of the

    Bush Administration, you have proposed a financial bailout program of $700 billion – over $2,000 for every man, woman, and child in the country. We

    are appalled that your proposal puts the cost of this bailout on average Americans; that it contains no provisions reversing failed deregulatory

    policies; that it allows executives at these failed institutions to continue to make exorbitant salaries and bonuses, and that your proposal

    contains no help for average Americans who themselves are facing severe economic hardships.

    While the Administration has quickly rallied to

    help Wall Street, it has ignored the needs of the declining middle class. Since President Bush has been in office the wealthiest people in this

    country have made out like bandits and have not had it so good since the 1920s. The top one-tenth of one percent now earn more income than the

    bottom 50 percent of Americans and the top one percent own more wealth than the bottom 90 percent. Incredibly, the richest 400 people in our

    country saw their wealth increase by $670 billion during the Bush presidency.

    Having mismanaged the economy for 8 years while continually

    insisting that, “The fundamentals of our economy are strong,” the Bush Administration, six weeks before an election, wants the middle class of this

    country to bail out Wall Street to the tune of one trillion dollars. Meanwhile the wealthiest people, those who have benefited most from Bush’s

    policies and are in the best position to pay, are being asked for no sacrifice at all. This is absurd. …

    http://sanders.senate.gov/petitions/?petition=financial_crisis_1

  • john fletcher

    There is a March on Wall Street scheduled for Thursday at 4 PM. Other cities are also organizing protests.

    http://www.naomiklein.org/shock-doctrine/wall-st-protest

    Also, a protest in Wash DC. on Sept 27.
    http://www.tickerforum.org/cgi-

    ticker/akcs-www?post=62255

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