The EconomistAvoiding future disasters means allocating blame acurately; and most of it lies with bad policy, not with greedy bankers.But ...
Avoiding future disasters means allocating blame acurately; and most of it lies with bad policy, not with greedy bankers.
The greedy bankers did subprime lending, securitization, credit default swaps, off-balance-sheet items and contingent liabilities all by themselves, with the intent to do an end-run around the regulators.
So it was not "bad policy" that caused the crisis, though there were quite a few policy-makers who were apologists for deregulation or "industry self-regulation". And if the problem was self-regulation, it was the bankers that failed to self-regulate anyway. Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith
It is their natural tendency to use their wealth to skew all aspects of national policy to their favor, along with the actual actions that brought disaster that I am descrying. We won't prevent a repeat or a continuation of the current problems until we take steps to curb the influence. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
