Seeds of Its Own Destruction,

Seeds of Its Own Destruction,

In the March 8, 2009 Financial Times article "Seeds of its Own Destruction," Martin Wolf proclaims the end of an era. Given the apparent failure of Keynesian economics to bring prosperity to the Western world, in the wake of high inflation and government bureaucracy, free-market conservatives like Ronald Reagan and Margaret Thatcher were idolized during the 1980s. Communism's fall seemed to confirm the failure of liberalism. The developing world began to adopt free-market practices and prosper. Now, with even Alan Greenspan in shame-faced doubt about the ability of markets to self-regulate, the pendulum has swung back once again in favor of government oversight. Even banks are clamoring for government handouts, and the words "I'm from the government and I'm here to help" are music to their capitalist ears. "The proposition that sophisticated modern finance was able to transfer risk to those best able to manage it has failed," writes Wolf.

According to Wolf, "the era of liberalization contained seeds of its own downfall: this was also a period of massive growth in the scale and profitability of the financial sector, of frenetic financial innovation, of growing global macroeconomic imbalances, of huge household borrowing and of bubbles in asset prices." America 'absorbed' 70 of the world's prosperity as oil supplies grew, and personal debt skyrocketed while inequities between rich and poor grew more chasm-like than ever before.