We are in an era of globalisation, we are told, of flat, inter-connected worlds. Yet the response in the US Congress to the Treasury’s proposed $700 billion remedy for this very international financial crisis has been strikingly parochial.
Not just that: it has been delusional. How else to describe those Congressmen who opposed the first vote, accusing Treasury Secretary Hank Paulson of practising “financial socialism”, which was somehow “un-American”?
This episode bodes ill for the world economy’s stability. For, huge as it is, this $700 billion package is unlikely to be the end of the story. At some stage next year, the new administration, whether led by Barack Obama or John McCain, will most likely need to offer another strong dose of “socialism” – a big bag of money, this time used to help recapitalise the banks directly. Given the public anger displayed in the past week about an undeserved lifeline for the greedy bankers of Wall Street, the politics of that next package are likely to be just as poisonous.