US Financial Crisis: Crony Capitalism? Privatising Profits and Socialising Losses?


Code : ECC0015

Year :

Industry : Banking, Insurance and Financial Services

Region : US

Teaching Note: Available

Structured Assignment : Available

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Abstract: US has been winning accolades for its capitalism till the recent past, with countries world over aspiring to follow the capitalism model of US. The major supporting factor for this model has been increased succeess recorded by US companies their valuations, share prices, global reach, etc. However, with some of the big names in that list getting obliterated with some unwarranted business practices, the model was questioned initially and loathed later. What's Crony capitalism, anyway? Was it one of the reasons for US Financial Crisis (2008)? This case study's information would enable an interesting debate on these two questions and related issues. In this crisis, the fundamental principle of capitalism 'he who reaps the gains should also bear the losses' was broken by socialising the losses, through the bailout of the banks, which were responsible for the crisis in the first place, using taxpayers' money.

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Pedagogical Objectives:

  • To analyse the relationship that existed historically between government and business in the US
  • To debate on the connotations of crony capitalism in the US
  • To debate on whether the recent financial crisis has anything to do with crony capitalism.

    Keywords : Financial Crisis, Crony capitalism, Government Connections, Political Favouritism, Capitalism, Disaster Capitalism, Fannie Mae and Freddie Mac, Campaign Donations, Political Campaigns, Bear Stearns, JP Morgan, Goldman Sachs, Business's and government, $ 700 billion Bailout, Lehman Brothers, Wa Mu, Regulation

    Contents :
    An Overview of Crony Capitalism in US
    Current Financial Debacles and Crony Capitalism
    Privatising Profits and Socialising Losses

    Case Introduction >>

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