“I fear the government has passed the point of no return,” said Ron Chernow,
a leading American financial historian. “We have the irony of a
free-market administration doing things that the most liberal
Democratic administration would never have been doing in its wildest
While they acknowledge the shock of the collapse of Lehman Brothers, the bailout package for A.I.G. on top of earlier government support for Bear Stearns, Fannie Mae, and Freddie Mac has stunned even European policy makers accustomed to government intervention in the economy.
“For opponents of free markets in Europe and elsewhere, this is a wonderful opportunity to invoke the American example,” said Mario Monti, the former antitrust chief at the European Commission.
“They will say that even the standard-bearer of the market economy, the
United States negates its fundamental principles in its behavior.”
In France, where the government has long supported the creation of
national champions and worked actively to protect select companies from
the threat of foreign takeover, politicians were quick to point out the
paradox of what is essentially the nationalization of the largest
American insurance company.
“Today the actions of American
policy makers illustrate the need for economic patriotism,” said
Bernard Carayon, a lawmaker of President Nicolas Sarkozy‘s center-right governing party, UMP. “I congratulate them.”
Here is the story. Since I am not a policy maker, I cannot claim that I am being congratulated personally. Still, I believe I am receiving a kind of indirect congratulations.
The economic fallout from these events is dominating the headlines. The intellectual and ideological fallout we are just beginning to contemplate.