Thu Apr 16th, 2009 at 07:22:14 AM EST
Over at Talking Point Memo, in their TPMbook club section, there is a book review by Galbraith that was posted yesterday: Prelude to disaster - By James K. Galbraith. He ends his article with this statement on the current status of the world financial situation, about those who are running it, and about the potential dangers we are facing:
The situation today resembles the early 1930s in one other important respect: the incredible complexity of international financial relations. The interwar world crumbled because it could not cope with the renegotiation of German reparations, a merry-go-round that went from American creditors to German cities and towns, to the German state, to the French and British, and back to the Americans. Something very similar, but infinitely more complex, is happening today in the rapidly unraveling world of credit default swaps and the carry trade from the United States, through the UK, Eurozone and Switzerland, and onward to Central and Eastern Europe, and back to the US via the currency swaps through which we are presently keeping the entire, precarious European financial system afloat. (Iceland was just the canary in the coal mine on this.)
Where it will end, is anyone's guess. But the potential for a disaster that cannot be handled by quirky, limited people chosen from insular clubs, and given vast and unaccountable power, is clearly with us again.