Want a good explanation of the current financial mess the economy is facing, check out Paul Krugman's NY Times editorial. I usually don't agree with Krugman, but this is a very clear and concise explanation of today's banking crisis.
Saturday, March 29, 2008
Financial Mess
Want a good explanation of the current financial mess the economy is facing, check out Paul Krugman's NY Times editorial. I usually don't agree with Krugman, but this is a very clear and concise explanation of today's banking crisis.
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4 comments:
Krugman makes an execellent point. Although Bernanke will be praised society should as how we got here although it seems pretty obvious. i wouldn't say it's because we didn't learn from the past but rather it's just happening because some things are unavoidable. The economy is never going to be completely perfect and the present eceonomy is definitely just an example of one of those times.
I just find it depressing that the article states that we're repeating history, and that we will relearn a lesson the hard way, again. Yes the economy will never be perfect, but it should never plunge down the way it did in the 1930s, especially if it is preventable.
Krugman is right--if we don't learn from our past mistakes, we are bound to repeat them. Of course, in order to learn from them, we have to accurately identify where, how, and why things went wrong. I don't think Krugman's explanation is really the whole story. According to Jeff Jacoby, the Community Reinvestment Act played a huge role in the current mortgage crisis. Others blame the war, others blame NAFTA, others blame overreactive financial analysts, etc. Yes, we need to remember what happened in the 1930s. But we also have to accurately determine the cause(s) of our current problems in order to fix them - and to prevent them from happening again.
So while Krugman made some strong points in his article, I don't think he explained the full story. I don't have the answer either, but I know we need to keep considering the possible causes...
Everyone discusses how we must learn from our past in order to prevent the same problems from occuring in the future. The concept that history repeats itself has become not only an integral part of society, but a cliched one. Thus, even the inventive concept has become repeated within history to the extent that it falls victim to its own vicious circle. But what does it matter? If we have come to any revelation with this concept it is that in order for history to repeat itself, it must continue on. Thus, the harms of economic recurrence are just as prevalent as its benefits. The implication is that the times of hardship will be sorted out one way or another empirically speaking, either by nature of their ephemerality or by some sort of comment on the survival aspects of human nature as a whole. Moreover, if that is not true, that means that the concept is entirely false, and Krugman's, as well as everybody else's, claim on the subject is as well. Thus, we must embrace the concept as a whole, establishing that equilibrium is even maintained in dynamics.
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