US Financial Crisis: Crony Capitalism? Privatising Profits and Socialising Losses?
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Code : ECC0015
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Region : US |
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An Overview of Crony Capitalism in US Enron debacle was one of those events that best manifested crony capitalism in US. Enron misled its investors by manipulating accounts and complex financial derivatives. Enron established strong political connections by giving lots of money to the members of the Congress. This helped Enron in escaping regulations and shaping up the US energy policy. The government connections of Enron was described as, "To make sure government would look the other way and allow the 'market' to have its way, Enron was generous with those willing to serve it, and few earned more Enron dollars than George W. Bush, who received some $623,000 for his political campaigns in both Texas and nationally from his friend Kenneth Lay, Enron CEO." Current Financial Debacles and Crony Capitalism The current US financial crisis is being widely summed up as a result of a blend of private greed and neglect on the part of regulators. The Asian financial crisis of 1997 was blamed on crony capitalism. The businessmen in Asia hid the truth about their assets, liabilities and profits from the investors, and even investors never looked beyond the strong political connections and backing of the businessmen... |
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Privatising Profits and Socialising Losses The US government announced $700 billion for bailout of Wall Street. This bailout is in addition to what the government has pledged to save Fannie Mae and Freddie Mac, AIG and Bear Stearns. Freddie Mac, Fannie Mae and AIG got bailed out as their collapse would have been catastrophic. Fannie Mae and Freddie Mac were rescued at a cost of $100 billion each. AIG was bailed out for $85 billion. Bear Stearns rescue costs summed up to $29 billion...
