The 700 Billion Dollar Bailout: The Need to Modify Capitalism

                The events that have rocked the American financial system in recent months, and worsening in recent weeks are a complete shock to the world leaders, and all world citizens.

                The White House has pressed the ‘panic button’, to warn us all that some urgent needs to be done, to save America the world economies from the effects of a collapsed US financial system.

                One wonders why the problem was not cited at a time when the bailout could have cost America just 50 Billion.

                Couldn’t the world leaders have protected us, before the waters reached neck-level?

                This issue didn’t begin today, but in the past years. It all started when the bankers and mortgage companies made a decision to lend money to people who were very risk borrowers. Because of their poor choices, the world is being held at ransom.

                The take-over of some US banks by the government and the now enormous 700 Billion Dollar Rescue Plan leaves economists and the ordinary citizen with some questions to answer.

                Must capitalism be modified, or we can leave it in its current state? This is a big question.

                Must guys like Hugo Cheves, Evo Morales, who nationalize industries in the computer age be supported or we must go the same way we have been going.

                With all these questions, we must not make a mistake about this. Capitalism, is surely, the way to do business.

                The form, in which it is today, is the issue that requires some emergency thinking, by economic professors, citizens, and above all, by the governments of the world.

Benefits of Capitalism

                Capitalism has really made a huge contribution to the world by encouraging enterprise among citizens of the world. People are free to make their own money, hence they work hard and in the end, the world benefits.

                Government controlled enterprises are normally characterized by political, not purely business decisions and this often leads to serious inefficiency. The appointees in these situations end up choosing directors who will put their interest, not business interests at heart.

The Need for Modification

                At a time of a crisis like the one the world is faced with, most people may accept a re-think of the way the world does business today.

The collapse of multinationals like Enron and several other examples leaves the question. Is the unchecked pursuit of profit dangerous to the world?

The unprecedented financial failure by companies like Lehman Brothers, Fannie Mae and Freddie Mac leaves some questions to be answered.

AIG, the world’s well known insurance company has gone the same way, leaving insurers worried that they will be left in the cold, like experienced by the XL holiday company. When the collapse  of this company came, holiday makers were disappointed, and others, stranded.

For those of us who have not followed the happenings of the financial markets, Northern Rock, a very successful UK bank, before the woes befell them, is also an indication that the extent of the problem is wide.

Why then are companies, all over, and everywhere collapsing?

 And one wonders why the British government and the American government, both of them staunch supporters of CAPITALISM and GLOBALISATION, would start jumping in the financial markets for bailouts.

Doesn’t it then, show, clearly, that government influence in enterprise is essential? Yes, one may say essential because if a remedy is called upon in the most difficulty situation, then that remedy can work (it is the best).

Problems, do truly exist.

Do we then throw capitalism through the window, and join the school of thought championed by the Fidels, Hugos of this world?

The answer is a BIG NO. Yes, a BIG NO.

But seriously, we need, ‘TO PUT A HUMAN FACE ON THE BUSINESS WORLD TODAY.’

Get it from me, if this financial crisis didn’t come, if the banker s and mortgage owners did not shoot themselves in the foot, they would have been coming on TV screens, boasting that what they did is the way to do business.

Honestly, capitalism and globalization that does not hesitate to pre-think its consequences on human dignity is not serving the civilized world.  The purpose of all business and all human endeavors MUST be, to make the world a better place.

Businesses are very crucial for our everyday lives, but then the effect of business decisions on workers and customer s must, at all times be evaluated.

Therefore, the ongoing negotiations by the US senate (Democrats and Republications) on the bailout of the ailing US financial sector must go beyond the bailout.

The best way to ensure stability of markets and the wellbeing of all humanity is to ensure serious consideration of human dignity.

Though state corporations are political in their decisions, governments pursuing extreme capitalism have it wrong because in the final analysis, governments were created to protect the interests of the ordinary citizen.

Hence, this demands of policy makers, the world over, to ensure that profit makers are checked in what transactions they are doing. Otherwise it is the taxpayer, the ordinary citizen who is going to bailout the financial giants.

So, all must support good business ethics.