Analysis: Capitalism's raw edge on display (Bolaji Ojo)

Created by : Airlight View profile

Pyramid Capitalism

U.S. Treasury Secretary Henry Paulson says the era of "raw capitalism" is over. He is mistaken.

Google Inc. CEO Eric Schmidt also claims the latest financial debacle on Wall Street "is in New York, not here. It's business as usual at Google." He is equally mistaken.

{xtypo_quote_right} "The ball is already rolling on the first U.S. consumer recession since the early 1990s, and the forces exerting the drag have not materially changed," Rosenberg said. "Nor will the constriction in credit be limited to the consumer. Business access to bank funding is likely to remain extremely constricted as well." {/xtypo_quote_right}

Capitalism is not a government-driven process. It is a system that has taken hundreds of years to evolve and, like a hurricane, it is directed and moved by the forces that shape it and not by the whims of mere mortals.

Economists believe the financial problems Paulson and other government officials are trying to resolve will deepen the U.S. economic recession, constrain government spending, lower corporate earnings, jack up taxes for everyone, raise lending costs for consumers and corporations and take many more years to clean up.

"For the here and now, look for steeper losses to be reported, look for equity to become highly dilutive," said David Rosenberg, an economist with Merrill Lynch & Co. Inc.