Listen to that hissing: The fuse is rapidly burning, warning us. Wake up before the rage explodes in your face. This firestorm is endangering America’s future. From forces outside, yes. But far more deadly, from deep within our collective psyche. We have lost our moral compass. We are self-destructing.
Crackpot warning? No. This warning comes from the elite International Monetary Fund. A recent IMF report looked at “the causes of the two major U.S. economic crises over the past 100 years, the Great Depression of 1929 and the Great Recession of 2007,” writes Rana Foroohar, an economics editor at Time magazine.
“There are two remarkable similarities in the eras that preceded these crises. Both saw a sharp increase in income inequality and household-debt-to-income ratios.” And in each case, “as the poor and middle-class were squeezed, they tried to cope by borrowing to maintain their standard of living.”
But the rich “got richer, by lending, and looked for more places to invest, bidding up securities that eventually exploded in everyone’s face. In both eras, financial deregulation and loose monetary policies played roles in creating the bubble. But inequality itself — and the political pressure not to reverse it, but to hide it — was a crucial factor in the meltdown. The shrinking middle isn’t a symptom of the downturn. It’s the source of it.” Today the consequences of the meltdown still haunt us — there’s more to come.
There’s a new bubble blowing. No one can stop it ... soon it will explode.
Worth reading the whole thing.
I agree that it's important to understand why the Great Depression started, and why it stopped. And Ferrell tells a story with emotional resonance, with lots of "us vs. them" rhetoric to rally our outrage.
But academic studies of 1930's economics do not support that story. He's more making a moral argument about the "evil greedy rich", than he is understanding the economic factors that caused the financial crisis in 1930 (and now).
I think that bubble explosion will be something good not bad. I don't like preaching style of those articles. Bleah. As you once said "Failure must be an option". So lets pierce the balloon!
Post a Comment