Is the current financial crisis a watershed event in the evolution of what we somewhat amusingly call capitalism or is it just a temporary interruption where normal service will be resumed as soon as possible?
Paul Krugman definitely takes the former view in these excerpts from an article entitled The Market Mystique at his New York Times blogsite.
My own suspicion is that the Obama administration is committed to try to resume normal service as soon as possible and in so doing will be sowing the seeds for an even larger structural crisis down the road.
In essence, the administration seems to believe that once investors calm down, securitization — and the business of finance — can resume where it left off a year or two ago.As you can guess, I don’t share that vision. I don’t think this is just a financial panic; I believe that it represents the failure of a whole model of banking, of an overgrown financial sector that did more harm than good. I don’t think the Obama administration can bring securitization back to life, and I don’t believe it should try.