Are we facing another bubble-driven crash? Where is the brake pedal?
A couple years back, Western investors — discouraged by low returns both in the United States and in the noncrisis nations of Europe — began pouring large sums into emerging markets. Now they’ve reversed course. As a result, India’s rupee and Brazil’s real are plunging, along with Indonesia’s rupiah, the South African rand, the Turkish lira, and more. Does this reversal of fortune pose a major threat to the world economy? I don’t think so (he said with his fingers crossed behind his back). ...PaulKrugman,NYT
And the villain isn't, as conservatives will tell you, inflation. So this isn't the time for raising interest rates those emerging market countries. So what's the problem here? Well,"the other obvious culprit is financial deregulation — not just in the United States but around the world, and including the removal of most controls on the international movement of capital."
So we're back to hard reality -- hard for conservatives, a lot more palatable for even the fattest liberal investor: reasonable regulation of the financial industry.
... The main lesson of this age of bubbles — a lesson that India, Brazil, and others are learning once again — is that when the financial industry is set loose to do its thing, it lurches from crisis to crisis. ...Krugman,NYT
Conservatives like to talk about certainty. How about finally putting in place sensible regulations that remain in place, aren't used as political weapons in successive Congressional sessions?
A frequent commenter at Krugman's columns is quoted in the comments on his editorial:
Transnational capitalism rules the world. And it's super-government run amok. It's the force behind the epidemic of social austerity and corporate deregulation, endless wars and constant surveillance of restive populations. Heads of state are mere brokers, competing for Super Government's business, outbidding each other to offer the most natural resources, the most legal immunity, the most generous corporate welfare. They offer up their increasingly desperate human labor pools, who are forced to work longer and longer for less and less.
