The recent events that have unfolded in the financial sector have led some to say that capitalism is dead, given the nationalization, or part nationalization, of troubled banks. But George Magnus, senior economic advisor at UBS disagrees with that claim.
“I think it is premature and probably inappropriate and not correct to say that this is the end of the capitalist system," Magnus tells CNBC's Asia Squawk Box. "Far from it.”
Putting Wall Street's losses on the taxpayer's tab will now bring about a sea change in the way we think about capitalism, he says, adding that more regulation and oversight will be needed on how banks are managed and governed in the future.
"This is going to be a defining kind of change in the way we think about how capitalist economies work," Magnus says. He adds that large-scale government intervention is unavoidable when the instability becomes this acute, but notes that the move came a tad too late.
When asked if he thinks we have come to the end of a financial era, Magnus agrees.
“It sounds a bit of a cliché to say it’s the end of an era. But it is the end of an era,” he quips. “It’s a cathartic moment for a lot of things -- a cathartic moment for the banking and financial services industry.”
