Global Economy Rests On American Shoulders
- By Konstantin Sonin
- Sep. 30 2008 00:00
The current plan is to allocate $700 billion to buy up only part of banks' "bad" securities -- though not all, as the administration of President George W. Bush had initially proposed. Banks that apply for government assistance will be required to relinquish a portion of their shares to the state so that taxpayers will not only shoulder the risks but also benefit from possible profits down the line. Additionally, banks will face limits on the salaries of executives who had signed contracts guaranteeing huge bonuses regardless of the bank's performance.
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The case was different in Europe, where the economic crisis led to military revolutions, consolidation of power by fascist and Communist dictators, famine, and bloody civil and interstate wars. Thus, the whole world is anxiously watching U.S. lawmakers, who might be deciding the fate of the global economy.
However, even during grave circumstances we can find a reason to smile. Maureen Dowd, the popular New York Times columnist, quipped in her Sunday column, "Who would have dreamed that when socialism finally came to the U.S.A. it would be brought not by Bolsheviks in blue jeans but Wall Street bankers in Gucci loafers?" With all due respect to Ms. Dowd, people like me who grew up under Russian communism know that the closest we ever got to a pair of jeans was looking at them in photographs. The United States, where jeans and a plethora of consumer goods have long been pervasive, is still a long way from socialism.
Konstantin Sonin, a professor at the New Economic School/CEFIR, is a columnist for Vedomosti.