Not much analysis and maybe a tad simplified, but one wonders how catastrophic the political failures of the last 8 years will be when combined with the economic collapse that we are witnessing. As I recently heard on the streets of New York City, 'let the bankruptcy proceedings begin!' -rg

THE WEST IS BROKE
By Deepak Tripathi, DandATripathi@gmail.com

http://www.counterpunch.org/tripathi10082008.html
October 8, 2008

And It's Not Just a Financial Bankruptcy

October the 7th was a day of high drama and panic on both sides of the
Atlantic. The New York Stock Exchange suffered further massive losses,
despite the $700 billion rescue package coming into force. In London,
shares in the banking sector collapsed, some falling by as much as
40 percent. The Chairman of the US Federal Reserve, Ben Bernanke,
admitted that the risk of a deeper economic slump had increased. And
George W. Bush, whose presidency looks destined for an ignominious
end, pleaded for coordinated action by the leading industrialized
countries. The International Monetary Fund estimates financial
losses of around $1.4 trillion. But there is no certainty. They could
be higher.

Central banks of several major countries have now announced cuts in
their interest rates, after weeks of indecision when each country
seemed to be engaged in domestic fire-fighting. America's rescue
package was for its institutions, although, if successful, it would
benefit others. On October the 8th, the British government became
the latest to announce a bailout plan of its own. It will spend
up to £50 billion in return for 'preference shares' in eight of
the largest banks in the country. The measure gives the government
some control over the banking system. And there will be restrictions
on20huge executive salaries and generous dividends to shareholders
that have caused strong public resentment in recent years.

In the immediate run, individual governments have largely done what
is best for their own economies rather than the global system. In
Europe, the Irish Republic, Greece, Spain, Germany, and Britain,
have taken unilateral action.

Their conduct shatters what was left of the idea of unity in the
European Union, especially among members of the euro currency zone. In
the longer run, the era of deregulation of the kind we have seen in
recent years is over.

Protectionism in trade has migrated to the world of finance. How far
the latest measures will succeed remains to be seen.

What we see is the result of a catastrophic loss of trust in the
West. It goes well beyond economics and finance. It is the sincerity
of political leaders of the West that is at stake. If those in power
in Washington, London and elsewhere cannot be trusted on the critical
matters of war and peace, law and justice and treatment of different
sections of their own populations, their ability in other areas is
bound to be questioned. The leaders of America and its allies have
simply become captivated by a doctrine that leaves their economies at
home, to be run by the large private institutions that they befriend,
while they themselves go and fight wars abroad.

Today, America's wars are financed by money borrowed from C hina
and the oil-rich Gulf states which are awash with petrodollars. The
invasion of Iraq was launched on the false pretext of weapons of mass
destruction. Later, a person of no less importance than the former
Chairman of the US Federal Reserve, Alan Greenspan, was to say that
the war was all about oil.

Instead of easy access to the oil-fields of the Gulf, what the US-led
expedition has achieved is turmoil in the region and beyond. America's
actions have contributed to dramatic oil price rises, which have hit
the world economy.

And countries like China, Russia and Saudi Arabia, which have
accumulated huge reserves in US dollars, don't trust the West. The
resentment in the Arab world against the treatment of Muslims by
the West is strong. And the government of Iceland criticizes its
'friends' for not doing enough to help it and looks towards Russia
to bail it out. The West is simply broke â€" morally, politically
and economically.