The roots and remedies of the financial crisis
In the last segment of Senior Editor Paul Jay’s discussion with Leo Panitch, Leo describes the various decisions on the part of the US government which led to the crisis. In short, Leo claims that the effort to house the poor without mobilizing large public expenditure is what created the conditions for the crisis. As a result, the only way to resolve the situation is to return this role to the state itself, as funded by progressive taxation and a sharp decline in military spending.
In the third segment of Senior Editor Paul Jay’s discussion with Leo Panitch, Leo explains how the credit crunch will affect state and municipal governments. Leo points out that the Great Depression had its roots in the bankruptcy of state and municipal governments, offering that in such a situation the national government must intervene to keep the states and municipalities solvent. Leo advocates for a hybrid of increased taxation and deficit spending to finance this, adding finally that a real solution requires more than a change in policy, but a change in deep structures.
In part two of our series of interviews with Leo Panitch, he gives his explanation of the causes of the financial crisis. According to Leo, the powering of the domestic economy on credit withdrawals instead of wage increases in recent US history is in large part to blame for the current crisis, a situation that Leo blames in large part on the devolution of the American trade union. Finally, Leo explains how the credit freezes affect the real economy.
After President Bush signed the controversial bailout bill into law, Senior Editor Paul Jay talked with Leo Panitch to get his analysis of the situation. Leo said it is irresponsible to suggest that the government should have let these banks fail, ultimately advocating for the full nationalization of the troubled banks. Leo then explains the significance of the US treasury bill as the base upon which everything else in the global financial system is valued, as well as explaining the US government’s role as the guarantor of the t-bill’s value. Finally, Leo criticizes the dominant paradigm that states and markets are separate and opposing forces in the modern capitalist system.