Press review 19 September 2008

by Lance King

Article published on the 2008-09-19 Latest update 2008-09-25 09:45 TU

As you’ve probably all heard, the world economy is not doing so well.

We may now be witnessing a new stage in the paradox of capitalism. Capitalism operates on competition but at this stage capitalism is eating itself.  Banks and the US government are taking over failing financial institutions at an unprecedented speed and thus eliminating competition. At this rate, there might only be a few banks in the world in a very short time.

The left wing Libération spoke with economist Daniel Cohen about the developments of what is now the world's financial crisis.

He says the American authorities thought that they had at least postponed the crisis back in March when they rescued Bear Stearns.  Then, with the nationalization of credit institutions Fannie Mae and Freddy Mac the buzz was, "welcome to the USSR."

Then the investment bank Lehman Brothers went bankrupt and the government said no, we not coming to the rescue this time. Cohen says this was perceived as the crisis at the end of the crisis. But it wasn't. It only caused more trouble and then the government had to save the insurance company, AIG.

Now, argues Cohen, we're going back to the fundamentals that advocates of the free market have been trying to undo for the past 20 years.  This is the end of the new age of finance, he says.

The belief that banks can regulate themselves and evaluate the risk they take is now being overturned. Who will now be the regulator?  “The state,” says Cohen.

The free market may not be so free for long.

The catholic daily La Croix says that finance needs ethics. Jean Arthuis, former finance minister told La Croix that regulation in the U.S. has been a total failure.

Americans were pushed to borrow and borrow more without any concern as to whether they would be able to pay back the money or not. 

Following the economic crisis after September 11th, the American central bank lowered interest rates and set off a borrowing spree that was disproportionate with the reality of the global economy.  In the last few years the world's economy has been growing at about 4 or 5 percent a year, while in the financial world it was as if it were growing at 15 percent a year.

In other news, there is an ongoing court case in the French city Lille as a married, Muslim couple try to get their marriage annulled.

You may recall that last year a court in Lille decided to annul a marriage because the groom discovered that his bride was not a virgin.  Under French law a marriage can be annulled if there is a lie about "an essential quality."  In this case, virginity was considered to be such a quality.

But the case caused uproar in France, with people arguing that religion was infringing on law. The case went to a higher court and the first decision was overturned.

The higher court says that making virginity a requirement for marriage threatens the principal of the equality of the sexes.

Well, the couple is going back to court on Monday. Le Figaro points out that both husband and wife have been trying to get the marriage annulled for nearly a year and a half.   

According to Le Figaro, the higher court made clear that the question of the hymen is not a presentable motive in a court of law.