The great financial crisis: The guilty men

Posted: November 6, 2014 in economy
Tags: , ,

WHO was to blame for the great financial crisis? How effective was the response of the authorities? And how can we stop it happening again? Those questions are at the heart of a fascinating new book of essays by prominent economists and regulators, well-worth reading by anyone with an interest in such topics, and free to download from the Hoover Institution.Readers won’t be surprised to find that the economists disagree; Larry Summers restates his secular stagnation thesis and John Taylor says his argument is “inconsistent with some important facts”; Taylor blames lax Fed policy before the crisis but Alan Blinder says any mistake was “small, forgivable under the circumstances and may not have done much harm”; Allan Meltzer blames the sluggish US recovery on the “mistaken policies and anti-business rhetoric of the administration”, even though the US has recovered much faster than the rest of the developed world, profits have been at all-time highs relative to GDP, stockmarkets have also hit record highs and in the first four years of the Obama administration, the top 1% of Americans made real income gains of 31% and the bottom 99% gains of just 1%. Short of the return of serfdom, conditions could hardly have been more favourable to the business elite.So let us deal with the opening two questions (to save the post from being excessively long, the third question will be left …

via Economic Crisis


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