Cost of Capitalism, by Robert Barbera, an economic seminar that everyone will ‘get’.
Over the course of 2008, Americans confronted breathtaking Wall Street bankruptcies, unprecedented home foreclosures, and rapid deterioration of the overall economy.
In response, a Republican administration engineered the greatest Washington bailout in America’s history. [full chapter here]
Review at Asia Times:
The last five major global cyclical events were the early 1990s recession – largely occasioned by the US Savings & Loan crisis, the collapse of Japan Inc after the stock market crash of 1990, the Asian crisis of the mid-1990s, the fabulous technology boom/bust cycle at the turn of the millennium, and the unprecedented rise and then collapse for US residential real estate in 2007-2008. All five episodes delivered recessions, either global or regional. In no case was there a significant prior acceleration of wages and general prices. In each case, an investment boom and an associated asset market ran to improbable heights and then collapsed.
From 1945 to 1985, there was no recession caused by the instability of investment prompted by financial speculation – and since 1985 there has been no recession that has not been caused by these factors.
On the free market’s greatest failure since the 1930s, Portfolio review.
What happens when the economy prospers is that people expect more prosperity.
They lower their guard and stop worrying about risk, especially in financial markets—where, after all, risk is priced.
- A long period of healthy growth encourages people to take bigger risks, and
- When many people assume more risk, even a small disappointment can have devastating consequences.