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Sunday, March 29, 2009

M J Akbar - Banking on Bankruptcy

We tend to forget that “bank” is the first part of “bankruptcy”. Barack Obama’s problem however seems to be a bankruptcy of ideas. No one I spoke to — and among them were high officials of finance — is yet certain how the most powerful economy in the world turned into a cashless casino. Obama’s solution is to flood the casino with money so that the game does not suddenly stop. How much money? A trillion dollars, and more to come. What happens when the dollar starts to slip to the value of printing ink? China, which has invested heavily in dollars, is getting edgy. Nobel Prize winner Paul Krugman is not impressed by Barackonomics. He writes that Obama is squandering his political capital by replicating a solution even Bush abandoned: cash for trash. The Titanic might leave the dollar on thin ice.


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