Comments on: Robert Kuttner: Congressional Testimony on Parallels to 1920s

By: Peter Pan

Peter Pan — Tue, 09 Oct 2007 16:59:00 +0000

I was amazed to see this thoughtful congressional testimony given by a fairly well-known MSM financial commentator.

Now for the bad news. If you read through some of Kuttner’s previous writings you’ll see that he’s anything but a fiscal conservative and would distance himself from Friedman’s opinion in favor of Dick Cheney’s “deficits don’t matter”. Oh well.

By: James

James — Mon, 08 Oct 2007 00:18:00 +0000

“As in the 1920s, the game continues only as long as asset prices continue to inflate; and all the leverage contributes to the asset inflation, conveniently creating higher priced collateral against which to borrow even more money.”

I dont know how anyone can deny that this process has being going on since the early 90’s.

By: GeorgeNYC

GeorgeNYC — Sun, 07 Oct 2007 14:31:00 +0000

The disconnect between the “real” economy and the financial economy is incredible. Its as if we we have come to believe that blackjack is an efficient market for determining the intrinsic value of playing cards.

The important issue here revolves around the language being used. By calling this “innovation” it blinkers the American mind. What is wrong with “innovation”? Suddenly the major sins are forgiven because if this is “innovation” then the corollary is that “we have not seen it before.” This of course forgives all policy failures because “how could we have forseen this” because it is “new.” Recognizing that this is the same old game would be an important step. Unfortunately, I doubt that anything will ever be done until the whole edifice collapses. That is not inevitable or certainly not desirable, however it seems the most probable result. All warnings to the contrary will be seen as “cranks” until they can n longer be ignored.