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Editor’s view – Republican party reptiles trash capitalism

So capitalism and free markets are to be laid low by the biggest political exponents of capitalism and free markets on the planet – the right wing of the American Republican party.

Well actually in reality the party is nothing if not populist. Asked to create what was effectively a $700 billion cesspit for all the ordure created by Wall Street’s credit binge, it has said no.

In pandering to Main Street America – naturally angry after years of policies which favoured fat cats over them – Republicans risk hurting Main Street even more. As any fool knows, the Wall Street and Main Street are inextricably linked. The Democrats hardly showed themselves any better at advocating the strong medicine required but this morning is a Republican party failure.

If there were any time for political leadership it was last night in Congress.

You can despise and abhor them but bankers of both the investment and the high street ilk are necessary. It doesn’t matter whether they are a necessary evil or a necessary good or anything in between, they are vital to us and to the world economy. Special rules unfortunately do apply.

Yesterday at the Tory Conference in Birmingham Shadow Chancellor George Osborne showed the right sort of tack for right wing parties to take – scathing of bankers but also practical about the need to find solutions.

This doesn’t mean that the bailout plan is wonderful.

American banks have portrayed themselves as wealth creators who should face low taxes and light regulation.

In London we hear the same nonsense parroted as well. That the wealth creators have turned out to be some of the most efficient wealth destroyers in history is also a grave irony.

Some sort of pain needs to be faced by banks on Wall Street in future. There was a grave danger that Treasury Secretary Hank Paulson’s plan, certainly initially, would have let all sorts of rogues and fools off scot-free.

It has been adjusted and makes more sense now but actually the fairness to America is an American matter – US legislators could have made sure of this and passed the plan anyway. Its failure risks more months of uncertainty and more state intervention of the sort of the Republicans claim they are opposing.

We aren’t of course talking about the end of capitalism and the rise of socialism. It is not suddenly going to become more efficient to distribute bread, rice or wide screen TVs through the state. And financial assets where they have any value will be sold back to the private sector as soon as possible whether that is in the US, Europe or the UK.

But there is a risk, if the remaining Republican refusniks in the House of Representatives continue to block this measure, that the downturn will be all the more horrible and last much longer.

All this from the political party that brought you the Hooverville – the US equivalent of the shantytown in the 1930s.

The political failure in America means more pain in Main Street America and eventually and inevitably more pain in High Street Britain.

Let’s hope they change their minds soon. They are being asked to create what is effectively a cesspit. Without it we may all end up wallowing in something deeply unpleasant for several more weeks.

As for anyone walking past Highgate Cemetery in North London this morning, if you saw a ghostly figure with a big grey beard, and a limited grasp of history talking nonsense about economics in a heavy German accent, yes, that was a “Vote Republican” badge he was wearing.

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