US as the world's only financial superpower

Regulation, says former US President Bill Clinton is the solution to the US sub-prime crisis. Speaking at Dave Letterman's show, Bill blames the American's penchant for making money out of money which created this pyramidal financial web that now threatens the economy. What's needed, says Bill, is for the Fed Reserve to infuse life in the economy, by absorbing the toxic debts, and enabling banks to free their books and expand their loan portfolios. That will allow American enterprises to still borrow money and support expansion of their businesses. Without expansion, the economy will continue to remain laggard and could seriously lead to depression.

Or, Washington could allow mortgagees to restructure their loans, making payments reasonably low to enable them to at least pay those amortizations. In this way at least, money would pour in instead of the present situation where there's nothing coming in.

And Washington seems to be the obvious winner in all of these. By infusing $700 billion into the financial system, it would control most of the global financial institutions through loans. That will, in effect, make Washington the world's biggest financial institution.

Some Americans are worried that the US will lose its global dominance due to this crisis. Yet, it's the opposite. The US government, through the Federal Reserve, will now become the world's only financial superpower should the US Congress allow Paulson and Bernanke's bailout proposal.

If that happens, then the world has entered a New era of neo-imperialism. Scrumpeter maybe right that obviously capitalism dies within a cycle of 50 years, then, slowly comes to life through creative deconstruction. What we are now seeing is the death not of capitalism per se, but the rise of regulated capitalism. What will be the effects of this newer kind of capitalism? We will never know, says Bill Clinton.