End of the line for Neoliberal economics?

InterPress News reports that in Germany, the first signs are beginning to appear that “the financial crisis around the world marks the end of Neoliberal globalization and the beginning of a new era of regulation of the global economy.” Skeptical? So am I.

Still, some encouraging news in yesterday’s dispatch from Berlin by Julio Godoy. For example, in the wake of the collapse of Bear Sterns and the global repercussions being felt from investment banks’ losses from their investments financial derivative instruments hit hard from the US mortgage crisis, German banks are actually asking for an end to Laissez Faire free-market self-regulation and actually asking the government to step in and regulate the banking industry more closely!

Josef Ackermann, chief executive officer of Deutsche Bank, the largest private bank in Germany, said in a remarkable speech Mar. 17 that he did not believe any more in “self-regulatory forces of the market.” Given the dimensions of the crisis over the last couple of months, “governments must intervene to influence the market,” he said.

Ackermann’s position was echoed by Deutsche Bank head economist Norbert Walter and by other leading economists. Walter said at a press conference that the financial crisis could last until late 2009. “We need a new organisation and new thinking on regulation of the financial markets.”

Michael Heise, head economist at the Allianz/Dresdner Bank, warned that numerous international banks would go bankrupt in the months to come, both in Germany and elsewhere, as a consequence of the financial crisis.

However, I think a reasonable interpretation of these comments from the captains of industry in Germany are a transparent attempt to have their government come in a do whatever it takes to stanch the flow of blood from these banks’ treasury departments. As the article points out, loan guarantees, “nationalization” of private institutions and other state responses are providing a bit of corporate welfare to the millionaire bankers who rolled the dice and came up short.

But what of the banks’ investors? And what of the taxpayers who will end up having to foot the hundreds of millions of dollar bill to “nationalize” these financial institutions currently on life support?

As Juergen Trittin, leader of the Green party, and former German Minister for the Environment from 1998 and 2005 puts it so well: “Banks first gambled away their clients’ money in hazardous speculation, and now expect that the clients, as taxpayers, foot the bill.”

IPS reports that he further pointed out that until very recently, corporate execs including Ackermann and Walter had been asking the state to keep its hands out of the economy. “Now, it is the state who must play the saviour.”