I have recently finished a good book : “Whoops!” by John Lanchester. It is another of a long series of readings i have done over the past two years since the crisis hit. Like most of them it explains the root causes of the financial and economic crisis, and the lack of cure so far. It does so probably less accurately but in a more lively and entertaining manner.
One of the most interesting contentions of the author is that with the end of the cold war and the obvious failure of communism, capitalism found itself unchallenged as a paradigm. The most extreme supporters of free unbridled markets found themselves in a position of ideological monopoly, and were able to dismantle the apparatus of controls that had been put together by governments after the crisis of ’29 and the social safety nets built during the cold war at a time when communist countries were claiming to bring security and happiness to their citizens.
It is an interesting theory, but I am not entirely convinced by the logic of the arguments. It certainly fails to recognise the historical events that were the opening up of India and China and their return to the forefront of the international economic scene after two centuries of absence. It also does not mention the impact of an ageing western population, and especially of the baby-boom generation, creating a glut of retirement money chasing yields that a smaller number of younger people could not satisfy -unless that is one could find a way to hand out large numbers of real estate loans to folks who could never pay them back …
Still a very interesting read !