It is ow difficult to find any institution, company

or individual not over their head in speculative debt

Under-capitalized capitalism, also known as

debt capitalism, has been the engine of growth

for the US debt bubble in the last two decades

This may be the first case in history

in which the downtrodden manage to bring down

an unfair economic system without

going to the trouble of a revolution

They stopped paying their mortgages and started

smashing the global financial system

Deeply rooted in US political culture is the view that credit is a financial public utility, much like air and water, and should be equally accessible to all, not just to the rich.

Economic democracy has been the core strength of US political democracy. Government loan guarantees for students and home mortgages for low- and moderate-income groups and loans to small business are based on this principle.

Yet from time to time, this principle of economic democracy is overshadowed by free-market extremism to push the nation's economy into extended depressions.

Debt Capitalism Self-Destructs [Source]

In a period of less than a year, what had been described by US authorities as a temporary financial problem related to the bursting the housing bubble has turned into a fully fledged crisis at the very core of free-market capitalism.

A handful of analysts have been warning for years that the wholesale deregulation of financial markets and the wrong-headed privatization of the public sector during the past two decades would threaten the viability of free-market capitalism.

Yet ideological neoliberal fixation remain firmly imbedded in US ruling circles, fertilized by irresistible campaign contributions from profiteers on Wall Street, methodically purging regulatory agencies of all who tried to maintain a sense of financial reality.

This ideology of "market knows best" has allowed the nation to slip into an unsustainable joyride on massive debt giddily assumed by all market participants.

These ranged from supposedly conservative banks, investment banks and other non-bank financial institutions, to industrial corporations, government sponsored enterprises (GSEs) and individuals.

The once-dynamic US economy has turned itself into a system in which it is difficult to find any institution, company or individual not over their head in speculative debt.

Undercapitalized capitalism, also known as debt capitalism, has been the engine of growth for the US debt bubble in the last two decades. This debt capitalism cancer is caused by a failure of central banking.

There has been a broad systemic collapse of debt capitalism, where capital has become dangerously inadequate and new capital hazardously and prohibitively scarce.

Those in the US responsible for the financial well-being of the nation seem to have been reacting tactically from crisis to crisis with a script of adamant denial of obvious facts, symptoms and trends.

There have been no signs of any coherent grand strategy or plan to save the cancerous system from structural self-destruction.

This band-aid short-term approach to artificially prop up share prices in the collapsing equity market and to maintain insolvent financial institutions with technical life-support will lead only to long-term disaster for the whole economy.

Yet this approach is preferred by those in authority, trapped in self deception about unregulated market capitalism being still fundamentally sound.

They try to calm markets by asserting that the current turmoil is merely a minor liquidity bottleneck that can be handled by the central bank releasing more liquidity against the full face value of collaterals of declining worth.

The message is that somehow, if easy money in the form of debt is made endlessly available, the economy will recover from this credit crunch, ignoring the fact that excessive debt has been the cause of the problem.

The assumption is that bad loans can be made good by Congress giving the US Treasury authority to buy up bad loans with unlimited amounts of taxpayer money.

Capitalists' prescription for stabilizing a debt-destabilized market is more public debt to support corporation socialism.