‘Bailout’ Capitalism: Two Years On

Dean Baker:

These bailouts led many to become concerned about the increasing role government played in the economy. Some conservatives in the US even raised the uniquely American alarm over ‘socialism’.

Now that the world has pulled back from the financial crisis and some time has passed, it should be very clear that this spate of intervention had nothing to with socialism – or even an expansion of the government’s role in the economy. These bailouts were about rescuing the bankers in their moment of need, saving them from their own greed and recklessness.

While the financial reform bill in the US and regulatory changes elsewhere are likely to prevent some of the worst abuses that led to this crisis, it looks very much like the end result of government intervention was the restoration of the status quo ante. In fact, the US financial sector is more heavily concentrated than ever as a result of several major mergers that took place in the midst of the crisis, without being subject to the scrutiny that such consolidations would ordinarily face.

(via Instapaper)