Introduction
The capitalism and socialism debate have been conflict-ridden as the left-wing rarely does agree with right-wing. In the United States, the Democrats are referred to as left wing while the Republican is referred to as right-wing. Most of the right wing policies are geared towards pure capitalism while the left-wing is socialism or communism inclined. The left wing support capitalism with a human face while the right wing desires to have a fully supported freedom to do things be it business or politics. It is in this regard that fault socialist capitalist for ills happening in the world.
Capitalism and Socialism Supporters views about 2008Financial Crisis
The current global recession and the 2008 credit crunch are some of the major financial crisis that has ignited the debate about the best policies from the socialists and capitalists ideologies. It is recognized worldwide that when the bailout failed and the Wall Street decision makers felt that they could not finance British Northern Rock bank, they knowingly or unknowingly set the stage for credit crunch that impacted on the globe. It is at this point that the socialists argue that the faults resulted from capitalist poor financial policy making or intention to defraud the masses. Time and again, capitalism has been seen to promote the eat man society notion. This is because; most of the capitalists care about their fiscal gain and how to multiply their monetary muscles without caring about the other side of the population.
It is true that when the Northern Rock bank closed its door, 2007 became the boiling point for global recession as big names that had risen started falling apart. As a socialist, one can argue that this was a preplanned financial landslide designed to rob masses, but the absolute truth is not known. The capitalist on the other side argues that the government or the Federal Reserve president or policy makers had the good intention of allowing people low-interest loans to buy houses. This introduction of the subprime mortgage was the top-notch idea that overbought to appoint of failing as the unforeseen overcame the original plan. For sure, this idea had a socialist side of it, as the Federal Reserve tried to make housing affordable to everyone, but the problem began when the homes prices started soaring up, and many people were unable to serve their loans.
The policy makers initially tried to uplift the declining economic activity that had hit the largest downturn and did this by lowering the Federal funds rate by more than 12 times. The action of trying to reduce inflation and empower the populace created a liquidity flood in the economy. Many borrowers, more so the ones who had no job, income and assets were enticed to try their luck in the sublime funding. This culminated to restless bank and real estate magnate to raise their home prices as the demand was high. What came next was increased the interest rate by Federal Reserve, and this was the last nail in the coffin. The jobless people started filing for bankruptcy as they could not put up with the new rates. The News about the failed repayment of sublime loans started reaching the bulletin board; many clients were worried and annoyed that made them either follows the same route of applying for bankruptcy or withdrawing their money from their respective affected banks. It was the effect of this crisis that led to the collapse of other sprawling global banks such as; Lehman Brothers, Indymac Bank, Merril Lynch shipped out, Freddie Mac and Fannie Mae went into receivership. The collapse of these global banking institutions that were once healthy financially led to the spread of the crisis to other countries as the financial market in the United Sates was unable to solve the subprime crisis; hence, making the interbank market freeze due to unfounded fear of what could happen next.
On a socialist point of view, it is the Fed policy makers that manipulated this idea solely knowing too well what would result at the end of the day. Thus, the collapse of these banks during the recession time was due to self–interest and lack of strict government regulation to control the lending financial institutions. According to the leftists, if the government was serious about halting the global recession before it ran out of hands, it could have done so by enacting regulation for lending and increasing interest rates, but this was left solely to banks to control their funding and decide the interest rates on their loans. This opinion is entirely different from what the capitalists, pundits, politicians and academics lament about the unintended consequences of the global capitalism. The capitalism proponent argues that it was just typical errors or unforeseen effect that led to global economic crunch, but the actual plan was to raise the living standard of the American. But opponents do not want to hear anything about this as they claim that all capitalists are selfish people who crafty shady deals knowingly to benefit themselves and their family while leaving the whole population to suffer.
Bibliography
Rose, Mark H. "A Failure of Capitalism: The Crisis of'08 and the Descent into Depression. By Richard A. Posner. Cambridge: Harvard University Press, 2009.
Singh Manoj. The 2007-08 Financial Crisis in Review. Investopedia,LLC, 2016.
