“This notion that the economy is self-stabilising is usually right but it is wrong a few times a century. And this is one of those times….” Lawrence Summers, Obama economic advisor in today’s Financial Times.
This is the wrong argument, one that supports unregulated markets most of the time. Rather, we’ve learned that the balance of market and regulatory power is something that cannot remain static over time, that constant retooling is needed. IF we want to think differently, it’s time to acknowledge that mixed markets are the healthiest and that, once this crisis is over, there is no “going back,” because the unregulated economy has demonstrated it is a ruinous economy.
Warren Buffett agrees: “We want to err on the side next time of not allowing big institutions to get as unchecked on leverage as we have allowed them to do.”