In a Democracy Now! exclusive debate, former federal reserve chairman Alan Greenspan and journalist Naomi Klein square off on the Iraq war, oil, President Bush tax cuts, social security, economic populism in Latin America, corruption and crony capitalism.
Let me tell you the story of the Goldilocks economy. Once upon a time there were two countries separated by an ocean. One was called China and its people worked long hours to produce cheap goods. The other was known as the United States. Once its people had worked hard and it was the workshop of the world. But recently, the US had not worked so hard and for every $100 of goods and services produced in its factories and offices, $106 was spent in its shopping malls. Instead of producing its own goods, the US bought them from China.
The Federal Reserve, America's central bank, last night slashed interest rates in a dramatic move designed to prevent the ailing US economy falling into recession.
By now, you’ve probably seen the photos of the angry customers queued up outside of Northern Rock Bank waiting to withdraw their money. This is the first big run on a British bank in over a century. It’s lost an eighth of its deposits in three days. The pictures are headline news in the U.K. but have been stuck on the back pages of U.S. newspapers. The reason for this is obvious. The same Force 5 economic-hurricane that just touched ground in Great Britain is headed for America and gaining strength on the way.
The days of the dollar as the world’s “reserve currency” may be drawing to a close. In August, foreign central banks and governments dumped a whopping 3.8 per cent of their holdings of US debt. Rising unemployment and the ongoing housing slump have triggered fears of a recession sending wary foreign investors running for the exits. China, Japan and Taiwan have been leading the sell off which has caused the steepest decline since 1992.
As the 2007 economic collapse picks up speed, it’s time to take a hard look at the performance of the U.S. national political leadership in meeting some of their most fundamental responsibilities. It’s time to face the fact of serious failure over the last quarter century.
