"I used to believe this state capture [by the finance sector] took the form of cognitive capture, rather than financial capture. I still believe this to be the case for many, perhaps even most of the policy makers and officials involved, but it is becoming increasingly hard to deny the possibility that the extraordinary reluctance of our governments to force the unsecured creditors (and any remaining non-government shareholders) of the zombie banks to absorb the losses made by these banks, may be due to rather more primal forms of state capture."Willem Buiter - Professor of European Political Economy, London School of Economics and Political Science; former chief economist of the EBRD, former external member of the MPC; adviser to international organisations, governments, central banks and private financial institutions - enters the 'relative autonomy' of the state debate. It's contracting, according to him it seems.
We're still playing pass the parcel with the unimaginable levels of debt, and the governments of the world are primed to pass them onto - well, not to those who created them, but the rest of us:
"For political expediency reasons, cuts in public spending are likely to fall first on maintenance, public sector capital formation and other forms of productive public expenditure, including spending on education, health and research. Welfare spending in cash or in kind is likely to be the last to be cut"
You don't have to expert in socialist theories of the state to understand this point. Try this analogy: every time a economist on TV uses the word 'us' or 'we' remember the old Lone Ranger joke.
He and his faithful Native American companion Tonto find themselves surround by a Sioux war band, and the masked man asks, "What are we going to do now Tonto?""Who's this 'we', Paleface...." comes the response.
So it is with the banking bailouts.