Global Finance’s State of Nature (national interests overwhelm NWO)

City Journal ^ | Autumn, 2009 Vol. 19 No. 4 | NICOLE GELINAS

[TigerLikesRooster]

NICOLE GELINAS

Global Finance’s State of Nature

Ambitions for a new world order are no match for national interest.

Sarkozy put pressure on us,” reports a nonplussed banker to a colleague in a recent French-newspaper cartoon, referring to the French president’s campaign against financial-industry bonuses. “And then what?” his colleague asks. “And then nothing,” is the reply.

/snip

National leaders are, in effect, competing over which country can offer its financial sector the most generous economic subsidy. This losing game ultimately hurts the financial sector—which needs market discipline to reward success and punish failure—and economic competitiveness as well.

/snip

Continuing to subsidize the financial sector carries long-term costs. A government-supported financial sector competes with other, perhaps more productive, areas of the economy for resources. Further, a financial-sector bubble based largely on implicit government guarantees can encourage governments to hike spending to profligate levels. And because the political will to cut spending in a downturn is usually lacking, tax increases then become almost inevitable. New Yorkers understand how this works. The British do, too: Britain has already hiked its top income-tax rate to 51 percent, effective next year, giving France a competitive opening.

Finally, the bigger any nation’s financial sector grows, the harder it becomes for that nation to bail it out. In autumn 2008, Iceland couldn’t save its own financial sector, the debt of which had reached nearly ten times GDP; it had to let its banks fail. Britain and the U.S. aren’t there yet; their bailouts seem to have “worked.” But if they continue to send the implicit message to financial firms that a government bailout is always available upon request, someday they will get there—through a sovereign debt crisis.

/snip

[TigerLikesRooster]

Ping!

[meadsjn]

Continuing to subsidize the financial sector carries long-term costs. A government-supported financial sector competes with other, perhaps more productive, areas of the economy for resources. Further, a financial-sector bubble based largely on implicit government guarantees can encourage governments to hike spending to profligate levels. And because the political will to cut spending in a downturn is usually lacking, tax increases then become almost inevitable. New Yorkers understand how this works. The British do, too: Britain has already hiked its top income-tax rate to 51 percent, effective next year, giving France a competitive opening.

Finally, the bigger any nation’s financial sector grows, the harder it becomes for that nation to bail it out.

And the faux capitalists wail about government intervention when their subsidies are cut.

[familyop]

That was truthfully written. The author is well informed on that particular matter.