Friday, September 19, 2008

US economic slowdown: Is this the end of US capitalism?


The past week has seen the US economy rocked by some of the worst global financial turmoil in decades, with venerable firms collapsing, global banks and governments pouring huge sums of money into financial markets in a bid to ease turmoil and thousands facing unemployment or financial ruin.

As US officials announce planned measures to tackle the crisis, Al Jazeera asked five prominent economists - does the crisis signal the end of US-style capitalism? And if so, what are the lessons learned?

James Galbraith, economist, professor at university of Texas, Austin

This does not mean the end of the United States' position in the world economy.

The US dollar has not moved, which does suggest that the position of the US government is still very much intact.

I think what it means is that in the future the big firms will have a smaller presence.

The years when the US government took the position that financial firms can run the country as they see fit and that regulation could be dismised is finished. There will be a major examination of how the financial markets are regulated.

Such financial events will have a lagged effect on everyone ... its most likely consequence is that the credit crisis will get more intense and the foreclosure crisis will get worse.

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