Talk about chutzpah. The guy’s in charge of an insolvent bank that’s still in existence only because of government guarantees on its assets, and he’s acting like they did the taxpayers a favor.

Claim: Photographs show four black bears cavorting on a backyard playset in Alaska.

Status: True.

These photographs of four black bears cavorting on a backyard playset were snapped by a resident of Anchorage, Alaska, in August 2006.

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Ever since the Renaissance, financialization has been one of the hallmarks of a great empire in decline. Reagan was a cheerleader of this process—the financialization of the U.S. economy–and did everything in his power to usher it in. To argue otherwise is really quite silly. A more appropriate question would be to ask if Reagan, or anyone for that matter, could have stopped it.

It is also nonsensical to argue that market absolutism, libertarianism, laissez-faire, neoclassism or whatever you want to call it, was not the operative paradigm during this period of decline. It was, just as it was during the decline of the British Empire. A more appropriate question would be to ask if some other paradigm could have arrested the decline. But one thing is sure, the bourgeoise formula for prosperity did not arrest the decline of either the Unites States or Great Britain.

Quoting Kevin Phillips from American Theocracy:

Historically, top world economic powers have found “financialization” a sign of late-stage debilitation, marked by excessive debt, great disparity between rich and poor, and unfolding economic decline…

“Financialization” can be defined as a process whereby financial services, broadly construed, take over the dominant economic, cultural, and political role in a national economy. In his book Praise of Hard Industries, British journalist Earmonn Fingleton deplores “financialism” as the increasing tendency by the financial sector to invent gratuitous work for itself that does nothing to addres society’s real needs but simply creates jobs for financial professionals.” My term describes only the broader cultural and national transformations.

The “too big to fail” doctrine was already written inexorably into American banking practice long before Reagan ever took office. Had he tried to supplant it with a more laissez-faire approach by, say, letting Continental Illinois and its uninsured depositors go under, the voters would have been happy to replace him with a more credit-expansive-minded Democratic alternative.

One also feels a slight twinge of revulsion in reading Krugman praise the savings rates of the 1970s, the same period those very savings were being eroded year after year by the very Keynesian inflationary policies which Krugman now prescribes as the cure for the current crisis. It would be nice if Mr. Krugman would settle on whether the economy suffers from a “Paradox of Thrift” or a dearth of savings; or, failing that, if he could explain how the economy could have better handled a 10% savings rate in 1998-2007 than it can in the year 2009.

Jim Grant’s Money of the Mind is an excellent history for those wishing to explore how the Depression-era innovations of deposit insurance and federal mortgage credit led inexorably to the inflation of the 1970s and the debt-fueled speculative booms of the 1980s-1990s.