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The real culprits are IMHO financial deregulation and exploding income inequality, the combination of which channels ever more funds to increasingly exotic investments in search of higher returns. Real interest rates were on average lower before 1970 than they have been since, and we didn't have these kind of asset bubbles developing.

There has been a technological sea change, enabling much faster creation and trade of all sorts of financial instruments, and computer driven, arbitrage-seeking trading strategies driving massive volumes.

There has been an ideological sea change, making greed good, and defining monetary value as the main arbiter of value, leading to a focus on financial management as opposed to industrial or soci-economic strategies.

There have been massive global imbalances, requiring a lot more financial engineering to deal with.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Sun Oct 7th, 2007 at 05:53:36 AM EST
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