One point from the book that I thought I would mention seems particularly poignant right now and relates to an earlier post on this blog, on the subject of the mass deregulation that took place in the US (and elsewhere) in the 80s.
It is fashionable amongst economist to judge deregulation an unmitigated success – apart from the unfortunate isolated incidents like the savings and loan fiacsco. (No one should have been surprised that savings and loan bankers used their new freedom to invest in junk bonds and other risky ventures that would yield high returns since their deposits continued to be insured by the government – at a final cost to the taxpayer of some $600 billion. Arrangements that confer all upside benefit on private investors and all downside risk on the public are bound to stimulate great feats of entrepreneurial daring.)
How much is AIG costing the American tax payer, was it $85bn? And Fannie Mae blah blah, and Northern Rock? The “system” is broken. Thankfully most of us will be spared any real hardship as a result of this free for all system in crisis.