OBAMA AND THE FINANCIAL CRISIS

1. When President Obama made a bid for three trillion dollars in order to deal with the financial crisis, I assumed that like the immediate past President and the Head of the Federal Reserve, he was going to use the money to bail out the failed banks and financial institutions.

2. This would be an exercise in futility because those banks and institutions failed because they cheated, because they abused the system. The only way they could be restored is by allowing them to cheat and abuse again, creating money out of thin air and lending 20 to 30 times more of this money to the funds held by the borrowing institutions for them to invest. It is this practice which has precipitated the financial crisis.

3. The bailouts have clearly failed. Increasing the amounts of bailout will not result in success. The failure will only get worse. It's the classical sending good money after bad money.

4. Now Obama and Brown are talking of going against the powerful financial elites. Brown implicated a shadow banking system based in financial havens - a system that has been beyond the control of Governments, and bereft of rules and regulation.

5. For decades the shadow banking system has been raping the world. Previous Governments had been forced to cover up their depredations. The bubble they created should have burst earlier. But the political elites did not have the guts. And so the abuses and cheatings had gone on until they became so big that cover-ups became no longer possible.

6. And when the bubble bursts the miscreants expected as a matter of right for the political backers to help then recover through bailouts with public money.

7. Now it seems there is a leader who dares to take on the powerful financial barons.

8. If I am not wrong I think Obama is about to destroy the cozy relationship between the American political elites and the financial elites.

9. This is because the only way to stop the rot is to destroy completely all the failed banks and financial institutions including the great insurance companies. They must not be revived, much less restored to their former selves.

10. Their victims should be helped out but they too must not be fully recompensed.

11. The world must return to doing real business - that of producing goods and supplying services. This will lead to the economies of the rich in particular to shrink. The GDP and the per capita will be much reduced.

12. There is no way this impoverishment of the rich can be avoided. There is no way the world can avoid a shrinkage of the total world economy, if we are going to stop a repetition of this financial crisis.

13. I hope Mr Obama will break the stranglehold of the financial elites on the political elites of America.

-Tun Dr. Mahathir Mohamad-