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Credit crisis overturns free-market ideology

The next president will decide whether the shift away from laissez faire is permanent.


Pragmatists: Fed Chairman Bernanke (left) and Treasury head Paulson talked of new moves Tuesday.

Gerald Herbert/AP

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George W. Bush, meet Franklin Delano Roosevelt.

With its sudden and sweeping plan to pump $250 billion directly into America's banking system, a Republican administration in essence may have opted for a New New Deal, intervening in private markets to an extent not seen since the days of the Great Depression.

The world financial system remains so fragile that a free-market-oriented White House felt it had no choice but to resort to this partial nationalization. Now the actions of the next administration will determine whether the move is temporary or a turning point in the US government's attitude toward laissez-faire economics.

"You do what you have to do. It will be judged by its long-term consequences," says says Bruce Bartlett, a former economic adviser to Presidents Ronald Reagan and George H.W. Bush.


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