In which fields is democracy a failure?
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Answer:
Eighteen months into the deepest economic slump since the Great Depression of the 1930s, one thing is abundantly clear: the world economy is once more suffering the incalculable shock effects of a massive market failure.
The bursting of the global credit bubble, predictably, is paralysing virtually all market sectors in most countries, even those (like Japan) that took earlier measures to fit 'bank proof' shock absorbers to their economies. Governments have been dazed by the scale of corporate debt issuance and 'securitisation' - the risky bundling of debts on such things as mortgages and credit cards. Panicked reactions and contradictory stopgap measures are multiplying. Trying to calm jitters, the International Monetary Fund's Dominique Strauss-Kahn has recently pronounced that the world faces a 'great recession'. Suddenly, as if through overnight conversion, politicians rail against 'greedy' bankers and corporate fat cats. Moralists are out in force and talk of victories against banks by 'people power' (John Prescott, former Deputy Prime Minister of the United Kingdom) is having a field day. Scapegoats - Bernard Madoff, Sir Allen Stanford, John Thain - have become household names. So have words like 'bail out', 'toxic debt' and 'rescue packages'. Of significance - Obama's 2009 budget points in this direction - is the appearance of first-stab efforts to formulate redistributive policies that protect citizens against unemployment, loss of savings, deteriorating public infrastructure and other effects of the bursting bubble.