Deregulations, Burst Bubble and Repercussions

      The fallout from Wall Street's collapse was a consequence of many factors and has resulted in the U.S.A. losing its central role and the rise of new powers.......Americas creditors. Here are some repercussions:-

1. The era of U.S. leadership is over. 2. The free markety philosophy has self-destructed. 3. An entire model of govt. and the economy has collapsed. 4.While lecturing other countries and forcing them to adopt its model ( Argentina, Thailand, Indonesia etc.), the U.S. was using a different policy for itself.....borrowing extensively to finance sweeping tax cuts and its military adventures....    Iarq and Afghanistan . 5. Those countries which refused to follow the U.S. model eg. Russia , China will shape U.S. economic future, because the U.S. will be even more dependent on the flow of foreign capital. 6. Blaming greedy banks may resonate on Main street, but it is these " blamers ",in Congress who allowed Wall Street to operate in their free wheeling way, by their ideology of deregulation. 7. The world's new rising powers.....China, Russia, the Gulf States etc.who buy huge amounts of government bonds, may become more cautious about continuing to  finance the U.S. for fear that they may not be repaid.  8. The fall of empires result from wars and debt.......the British after WW1 and the USSR after Afghanistan and Star War expenditure, are two recent examples.

     The U.S. saddled with two costly wars and huge debt, is no different. While it may continue, at least for a while, to be the world's largest economy,it is coming to an end. Laissez faire capitalism has imploded. Matrket economies that refused to follow  U.S. style deregulation will survive.

      This crisis was produced by a toxic mix of special interests, misguided economics and right wing ideologies. This has created a mess and U.S. economy was not helped by decaying infrastructure and two bloody/costly wars.

      Bailout that rely on " trickle down economics "will not work. Giving money to Wall Street will not trickle down to Main Street. They made bad loans ( housing bubble ) on inflated prices and these prices will fall further, causing even more foreclosures. These bad loans created huge holes in banks balance sheets and this must be repaired.

      Credit will be hard to get......causing buisnesses to cut back, jobs will be lost, investment will stagnate and economic slowdown and Recession will result.

     What must be done?  1. Make housing more affordable for workiong poor and middle income Americans...... give some form of tax credit and lower mortgage cost. 2. Create a new regulatory system to monitor the market and 3. Bankruptcy reform is needed to allow homeowners to stay in their homes....eg. the Government can assume part of a mortgage . 

      Thiswill bring about some confidence  and encourage the people. Consumer  spending will gradually increase and this, not trickle down economics, will work to revitalise the the marketplace.