Early this week, the United States House of Representatives rejected a US0-billion bailout plan endorsed by the Bush Administration to salvage Wall Street by buying up the banksâ€™ bad debts with taxpayersâ€™ money to preempt further escalation of the economic turmoil that may ravage global markets.
The Wall Street meltdown has shown us how unfettered free markets can run amuck and ravage whole economies. The reckless abandon by which Wall Street hedged funds and derivatives illustrate how, without strong government regulation and public accountability, an elite few can destroy the rest of the world.
Thomas Friedman observed the important role of government in this crisis. He said in his New York Times column, â€œIn this age of globalization, government matters more than ever. Smart, fiscally strong governments are the ones best able to empower their people to compete and win.â€
The Wall Street meltdown buttresses the necessity of more credible government regulation on the one hand, and public accountability through transparency on the other. This call follows the previous demand for better governance following the aftermath of Enron, wherein the top energy corporation ran amuck without much government intervention that resulted in its bankruptcy, and the difficulties faced by its employees and investors in recouping their money.
Interconnected capital markets should drive governments to be more vigilant in ensuring that bankers and investors are accountable to the public, since people are often investing their retirement funds or their savings in these markets.
The harrowing experience of corporate recklessness calls for not merely a US government intervention, but a global action. There is the necessity of establishing a global financial regulator independent of any of the existing bodies like the World Bank or the International Monetary Fund to oversee the activities of capital markets.
There is the saying that when the US economy sneezes, the rest of the world gets flu. Now then, a global doctor is needed to cure this financial sickness.