Out of Control Policy Blog

U.S. "irresponsible": Excuse me Mr. Putin!?

When the Dow Jones dropped 777 points on Monday, along with record percentage drops in the Nasdaq, and S&P Index, it took the rest of the world's markets with it. The British stock market crashed. Other European and Asian markets tanked too. The Euro has been tumbling against a rising dollar (ironic to say the least) as European banks are starting to buckle under their bad investments. The continent on the other side of "the pond" that has been staring down its nose at us for the past several months in mocking arrogance forgot to check the plank in its eye first.

Of course, given the more socialist tendencies of European countries, it is much easier for their governments to step in and nationalize banks. On Sunday, Belgium partially nationalized the famed Fortis bank with an 11 billion euro bailout ($15.5 billion USD). On Monday the British government decided to takeover Bradford and Bingley, the country's eighth biggest mortgage lender. And yesterday the French government helped bailout Belgo-French bank Dexia.

The Europeans are just as fast as the Republicans and Democrats to play the blame game. Yesterday, European Union spokesman, Johannes Laitenberger, told journalists that Europe "expects that the [American $700 billion bailout] will go through soon... The turmoil that we are facing has originated in the US; it's become a global problem. The US has a special responsibility in this situation."

Ironically enough, and what should be an embarrassment to Europe, Russia is echoing their concerns. Yesterday, Russian Prime Minister--and de facto supreme leader--Vladimir Putin said: "Everything that is happening in the economic and financial sphere has started in the United States. This is a real crisis that all of us are facing. And what is really sad is that we see an inability to take appropriate decisions. This is no longer irresponsibility on the part of some individuals, but irresponsibility of the whole system, which as you know had pretensions to (global) leadership."

Excuse me, Mr. Putin, and all of Europe while I'm at it, but if you are so concerned about your economies then maybe you should be taking action yourself. Perhaps you shouldn't tie your economy so close to ours, unless it is more profitable for you to do so... oh, wait, it is. Just like GSEs Fannie Mae and Freddie Mac, the world wants to reap the benefits of a financially strong America without suffering any any negatives with us during our cycles of economic downtown turn. No one can have their cake and eat it too.

While Putin accuses America of being "irresponsible" he has been mismanaging his own economy for years, only kept alive by the high price of oil (which has been tanking lately). In a sign of how vulnerable Russia's economy is, officials halted trading on the Moscow stock exchange for two hours on Tuesday morning (the third time they've done so in the past few weeks), fearing investor reaction to the House's rejection of the bailout plan. If Bush stopped trading on Wall Street with similar fears imagine what that would do to the U.S.... it's happening in Moscow. Time for some late morning vodka.

European banks are going under, not because of the U.S. crisis (though it has a role to play), but because they TOO made bad financial decisions. Their losses have been socialized to the peoples of England, France, and Belgium. Now Spain, Ireland, and Italy are facing problems too and their people had better tighten a hold on their pocketbooks. Bailout fever is sweeping the world faster than the NBC sci-fi show Heroes.

Anthony Randazzo is Director of Economic Research


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