The markets are always right... Crazy idea, The Failure of the Market Mechanism

The Failure of the Market Mechanism, and the Collapse of Neoliberalism
Former French President Nicolas Sarkozy believed that the economic turmoil provoked by the US financial market crises put an end to the theory of the free market economy, and President Sarkozy believes that a certain conception of globalization is coming to an end with the demise of financial capitalism that imposed its logic on the entire economy and contributed to its deviation. "The idea of the absolute power of markets and that they should not be bound by any rules´-or-political interference was crazy, and the idea that markets are always right was also crazy," he said. The former French president called for reform of the global capitalist system after the global financial crisis in 2008 exposed serious gaps in global banking activities, calling on the European -union- to start thinking about a new monetary policy. Sarkozy predicted that the chaos of financial markets in the United States would affect the French economy for months by virtue of its integration into the global economy, but promised that no one in France would lose his bank deposits.
At the same time, former US Secretary of State Condoleezza Rice strongly defended the capitalist system.
On 15/9/2008, the largest American bank, Lehman Brothers, was declared bankrupt, and the major American insurance company (AIG) was subjected to difficulties, during which it lost 70% of the value of its shares on the American and international stock exchanges. This collapse occurred after months of the mortgage crisis, which led to a decline in real estate investments, and the inflation of the assets of banks and real estate institutions with doubtful debts, and low-solvency bonds, forcing former US President George W. Bush to announce (that his government has always preferred not to interfere in the course of the economic process, but there are circumstances that dictated it to do so).
Thus, the basic rule of the capitalist system and the neoliberal approach fell, namely that the state does not intervene in the markets and leaves it to the justice of the market law (the mechanism of supply and demand).
The neo-liberals and their world governments criticized Mahathir Mohamad in the summer of 1997, when he demanded the use of the interventionist role of the state to contain the crisis of the Asian Tigers, and mocked Venezuelan President Chá-;-vez and the Bolivian president while pushing the state to intervene in economic affairs, while today resorting to the largest economic intervention in the history of the capitalist market, sometimes amounting to nationalization, this intervention becomes blessed and appropriate when carried out only by liberals!!!
Neoliberals advocate that the state should intervene in the event of market failure and have even carried out what can already be described as the largest nationalization process that has transformed the United States into the "Socialist Republic of the United States," in the words of American economist and professor at New York University Nouriel Roubini, but in his words "socialism privatization of profits and nationalization of losses for the rich and powerful on Wall Street."
Milton Friedman gave a perspective contrary to the entire course of Keynesian economic policies that prevailed for four decades after the 1929 global crisis, thus opposing any organizational-planning intervention of the state, calling for the abolition of the Federal Reserve System, and considering that the actions of individuals in the market alone are sufficient to manage, regulate and correct its course, as he believed, unlike Maynard Keynes (1883-1946), that economic contraction is not combated across the state, planning and high taxes, and inflation does not decline and is eliminated through monetary deflation policies, but rather By increasing the flow of money in the market, considering them a purely monetary phenomenon, proposing a solution to them by leaving the market free to its extent through its own movement, while reducing taxes to the maximum.
Republican presidential candidate John McCain spoke angrily of the casino-style financial system, whose depositors are ultimately victims, including sovereign funds and large investors in those clubs who would have mocked those who use the term had McCain not used it.
It goes beyond the way the dominant countries leading the globalization process deal with neoliberalism as a "selective package" indeed, while exporting it to developing countries as a "complete package", i.e., presenting the crisis of origin´-or-the liberal model itself. Neoliberalism denied countries characterized by market fragility and weak economic structures any controlled intervention in their economies, whose exposure rates are the most in the world as a result of the application of neoliberal pre-script-ions, while organized and tireless state intervention for many centuries in the market economy of the West was the condition for its development, as the economic history literature says.
Prof. Dr. Moustafa El-Abdallah Al Kafry
Faculty of Economics - Damascus University

Rate the article
Bad	1	2	3	4	5	6	7	8	9	10	Very good
Result : 100%							Participated in the vote : 1