The end of neo-liberalism?

Is this the end of neo-liberalism? Naomi Klein suggests not (also here). In her view, the ideological fantasy (nightmare) of self-regulating markets will rear its ugly head once again as soon as the storm passes, and now is the time to demand structural reform to defend against the predations that it underwrites. In her view the public debt obligation incurred over the course of this crisis will be used as leverage to push through unpopular reforms in the not-too-distant future. As an example, Obama will be under pressure moderate his already rather anemic (or at least stupidly complex) health-care reform proposals. Or similarly, stupid ideas like "Drill Here, Drill Now!" will gain traction, as people in a state of shock have a hard time keeping their critical faculties in tact (ie they might overlook the fact that oil produced in Alaska's northern slope will enter a world market and have no short or long term impact on local prices at Chevron. They might also be induced to overlook the most basic market principle: there are two ways to affect price: increase supply, or decrease demand. It would take 10 years to increase supply by bringing new sources online (the psychological impact of new exploration would be negligible), whereas we could cut demand virtually overnight. The fastest way to bring down the price of a gallon of gasoline is to demand less of it.

Alexander Cockburn reminds us that the " capitalist system is always in crisis. Crisis is integral to the system," and points out the fact that the two key figures behind the repeal of Glass-Steagall/ the Commodity Futures Modernization Act were John McCain money-man Phil Gram, and Obama money-man Robert Rubin. And he adds this:

"Three and a half years after Black Thursday, 1929, Roosevelt’s job was to bail out capitalism, which he did, with his advisers borrowing policies from Europe, both from Italian fascism and the socialist tradition.

If Obama becomes president what advisors will he recruit? Will he keep Rubin at his side along with his passel of Chicago School economists? His left supporters hope that he has a secret plan under wraps, that a populist T-shirt lies under the decorous mask of bipartisanship."

If Obama can manage to overcome the "Bubba vote" (Stanford study), Deibold the electoral college, and the supreme court, he will have indeed proved himself a super-hero.

Eric Margolis reminds us that historically, fiscal and economic crisis combined with military defeat has been a recipe for Revolution.

On the trillion dollar check to Paulson and his gang before they sneak out the door in November, Krugman says: "No Deal." If it was a matter of the state acquiring valuable assets that would be one thing, but subsidizing Wall Street's losses? No Deal.

Krugman on the "paradox of deleveraging." (ie when the selling of assets further depreciates their value).