Prakash Karat argues in an
op-ed today the gist of which is that financial deregulation caused the ongoing financial crisis in the US and the $700 billion contemplated to fix this problem is aimed at helping the 'fatcats and speculators recoup their losses'. Both claims are false. Read
this to understand the issue, these articles (
here,
here and
here) which explain why absence of regulation was
not the cause of this crisis (not paucity but potentially bad regulation - see
this and
this)and
this piece which summarizes briefly what the US treasury department has done and how it does
not benefit the rich but the
hoi polloi who otherwise stand to lose the most from the failure of these firms. The episode may potentially have lessons for India but it is premature to say what they are. The imperative to prevent liberalization is however definitely not one of them as Karat posits.
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