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Jesse of Jesse's Cafe linked to this great commentary from Kevin Philips:
http://tpmcafe.talkingpointsmemo.com...lization/#more
The thing that struck me most was this passage:
"This is a much grander-scale disaster than anything that happened in 1929-33. Worse, it dwarfs the abuses of debt, finance and financialization that brought down previous leading world economic powers like Britain and Holland (back when New York was New Amsterdam)."
Squinting hard, that strikes me as likely right. It's hard to shake off the hope bias even reading bearish opinions all the time. If we are to reach what Taleb calls a richer "ecology" it's going to be a hard slog since, of course, we will start weighted down with our past follies. Or, to put it another way, the financialisation of our economy has distorted all values such that even legitimate, valuable businesses are cut off at the knees at the very moment that the lengthy road to recovery opens up before us in its full and daunting length. (A good example might be the horrific state of venture capital that EJ has described.)
I really liked Taleb's description of where we have to go (which I think is very much the same one EJ sees:
"... this crisis cannot be fixed with makeshift repairs, no more than a boat with a rotten hull can be fixed with ad-hoc patches. We need to rebuild the hull with new (stronger) materials; we will have to remake the system before it does so itself. Let us move voluntarily into Capitalism 2.0 by helping what needs to be broken break on its own, converting debt into equity, marginalising the economics and business school establishments, shutting down the “Nobel” in economics, banning leveraged buyouts, putting bankers where they belong, clawing back the bonuses of those who got us here, and teaching people to navigate a world with fewer certainties. Then we will see an economic life closer to our biological environment: smaller companies, richer ecology, no leverage. A world in which entrepreneurs, not bankers, take the risks and companies are born and die every day without making the news."
http://tpmcafe.talkingpointsmemo.com...lization/#more
The thing that struck me most was this passage:
"This is a much grander-scale disaster than anything that happened in 1929-33. Worse, it dwarfs the abuses of debt, finance and financialization that brought down previous leading world economic powers like Britain and Holland (back when New York was New Amsterdam)."
Squinting hard, that strikes me as likely right. It's hard to shake off the hope bias even reading bearish opinions all the time. If we are to reach what Taleb calls a richer "ecology" it's going to be a hard slog since, of course, we will start weighted down with our past follies. Or, to put it another way, the financialisation of our economy has distorted all values such that even legitimate, valuable businesses are cut off at the knees at the very moment that the lengthy road to recovery opens up before us in its full and daunting length. (A good example might be the horrific state of venture capital that EJ has described.)
I really liked Taleb's description of where we have to go (which I think is very much the same one EJ sees:
"... this crisis cannot be fixed with makeshift repairs, no more than a boat with a rotten hull can be fixed with ad-hoc patches. We need to rebuild the hull with new (stronger) materials; we will have to remake the system before it does so itself. Let us move voluntarily into Capitalism 2.0 by helping what needs to be broken break on its own, converting debt into equity, marginalising the economics and business school establishments, shutting down the “Nobel” in economics, banning leveraged buyouts, putting bankers where they belong, clawing back the bonuses of those who got us here, and teaching people to navigate a world with fewer certainties. Then we will see an economic life closer to our biological environment: smaller companies, richer ecology, no leverage. A world in which entrepreneurs, not bankers, take the risks and companies are born and die every day without making the news."