Aug 28, 2009 (LBO) – Sweeping ‘nationalization’ of collapsing banks, state mandated mortgage lending and centrally planned interest rates has made the USA a socialist state, Sri Lankan viewers of a film on the US economic collapse said. Paulson, the multitude of bankers and financial journalists repeatedly said in the film, had made ‘mistakes,’ in being reluctant to bail out collapsing banks.
He had apparently mistakenly refused to perpetuate the moral hazard of encouraging private risk taking, on expectations of socializing losses.
His ‘treachery’ was perhaps all the more greater as he was a former member of the banking tribe. Paulson changed tack, when his ex-employer, Goldman Sachs, was about to go under.
The hero of the piece was the ‘soft spoken’ academic, US Federal Reserve chairman Ben Bernanke, who saved the day by printing billions of dollars to give liquidity to a shriveling Wall Street that found bloated assets ‘deflating’ overnight.
The film’s producers did not waste any time examining the years (or decades) of state intervention in housing, or a fiat paper money monopoly that led to the bubble being formed in the first place.
Similar mental blocks are found in accounts of the ‘Great Depression’, whe