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Galbraith: "In 1929, the authorities were making the same reassurances"

J.K Galbraith (remember him?) is grilled in Libération on confidence in the markets etc today, and a rayon de soleil he is not.

No, I am not consorting with Keynesians, so to speak, but felt that it might be worthwhile taking this to a smaller audience:

Libé: "Do the scenes of queues outside Northern Rock branches raise the spectre of 1929?"

JKG: "The crisis was inevitable, and the contagion, real. One saw scenes of panic in Great Britain - based on the irrational - of deep seated distrust, of a crisis of confidence. It is only the beginning of a banking crisis which could recall 1929, but which would be invisible. The effects on the real economy are clear already with the free fall of the housing market and soon with consumption and perhaps employment".

.....

Libé: "But economic commentators tell us that "the fundamentals are good", that "companies are prosperous", that "world growth is solid".

JKG: "Yes, but they said precisely the same thing before the 1929 crash. The Twenties saw full employment, based on extraordinary growth and stock exchange speculation, in the image of the Nineties...Since 1995 the US has seen growth...financed by the debt of both individuals and companies to the advantage of the internet bubble and its business plans based on hot air, then to this property bubble...The same charade is at work today"...

Libé: "In other words, the pilot doesn't have control of the plane?"

JKG: "....The drama is that the central banks by acting as lenders of last resort have encouraged commercial banks to extend their more speculative operations. Any successes will be to their profit and any failures will be paid for by the rest of us. Thus the banks are absolved of all their sins".

....(Lengthy discussion of regulation etc)....

Libé: "Alan Greenspan, ex head of the Fed, predicts a serious economic crisis. Which is astonishing for someone who fed the successive bubbles".

JKG: "He spoke the truth. He is no longer constrained and no longer disguises his words".




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Blogger Colin said... 3:13 pm

J.K Galbraith (remember him?) is grilled in Libération on confidence in the markets etc today

That would be a good trick. The J.K. Galbraith dies on 29th April 2006.

This Galbraith is his son James
http://www.utexas.edu/lbj/faculty/galbraith.html

I think he might even be to the left of his father.  



Blogger Croydonian said... 3:16 pm

I stand corrected, nay, utterly humiliated.  



Blogger CityUnslicker said... 9:04 pm

stll all fairly sensible stuff none the less.  



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