Suggestions of political influence and a palpable lack of transparency are emerging. There are allegations that the Henry Paulson, the previous US Treasury Secretary, may have "pushed" Bank of America (BAC) to consummate its controversial acquisition of Merrill Lynch when it sought to withdraw after additional losses came to light. Certainly, the purchase of Merrill Lynch does not fit comfortably with chairman Ken Lewis’ earlier statement - that "he had just about as much fun in investment banking as he could take/"

The Treasury secretary is alleged to have suggested that Bank of America’s management and board could be removed if it did not proceed. There are also suggestions that both the Treasury and Bank of America decided to avoid public disclosure of these events.

The appointment of Timothy Geithner and Larry Summers was viewed favorably, at first. The feeling was that they knew where the bodies were buried. (Critics pointed out that this was because they may have put them there.) The "closeness" between banks and government officials and regulators that's being exposed daily is increasingly part of the problem in dealing with the real issues.

Mancur Olson, the American economist, in his books (The Logic of Collective Action and The Rise and Decline of Nations), speculated that small distributional coalitions tend to form over time in developed nations and influence policies in their favor through intensive, well funded lobbying. The policies result in benefits for the coalitions and its members but large costs borne by the rest of population. Over time, the incentive structure means that more distributional coalitions accumulate burdening and ultimately paralyzing the economic system causing inevitable and irretrievable economic decline.

Government attempts to deal with the problems of the financial system, especially in the US, Great Britain and other countries, may illustrate Olson’s thesis. Active, well-funded lobbying efforts and "regulatory capture" impede necessary changes to the financial system. For example, the Center for Public Integrity reports that the top 25 subprime mortgage originators, with most linked to large US banks, spent around $380 million in lobbying costs and political contributions (The Economist, May 9, 2009).

Larry Summers, an uncompromising advocate of deregulation and liberalization, blamed the Asian crisis, in part, on "crony capitalism." Increasingly, government actions to rescue and re-regulate the financial system display many of the characteristics of the policies that Summers once criticized.

The phrase "military industrial complex" described the complex inter-relationships and influences that shaped America in the post-war era. The "finance government complex" (dubbed "Government Sachs" by its critics, perhaps because of the ubiquity of Goldman Sachs (GS) execs in high places) replaced the original arrangement in the late twentieth century, and may well prove to be the undoing of American economic dominance.