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Showing posts with the label "financial crisis"

Fundamentalism

Unlike the previous economic recession (the long depression), today almost everyone is predicting a recession in a few months. In 2010 the following question was put to a Nobel Prize winner. – "So what caused the recession if it wasn’t the financial crisis?" – "(Laughs) That’s where economics has always broken down. We don’t know what causes recessions. Now, I’m not a macroeconomist so I don’t feel bad about that. (Laughs again.) We’ve never known. Debates go on to this day about what caused the Great Depression. Economics is not very good at explaining swings in economic activity." —Eugene Fama
An admission that this one of the inherent aspects of capitalism In Tooze’s view,  “These crises are hard to predict or define in advance,”  and, short of more regulation, there is nothing we can do. In a way, as long as capitalism continues as the dominant mode of production globally, that is pretty much right.  That reminds me of what Greenspan said in his final summation of the crisis: “ I doubt that stability is achievable in capitalist economies, given the always turbulent competitive markets continuously being drawn toward but never quite achieving  equilibrium” . He went on,  “unless there is a societal choice to abandon dynamic markets and leverage for some form of central planning, I fear that preventing bubbles will in the end turn out to be infeasible. Assuaging the aftermath is all we can hope for.” Crashed: more the how than the why