Great Article on the Panic of 2008

Simon Johnson’s testimony to the House Committee on Financial Services.

This is a must-read for anyone and everyone. I’ll preface it with a few comments.

First off, yes a free market is best for handling just about everything. However, when players in a market collude with government to change said market so that it is no longer free… when players in a market take steps to perform actions that are injurious to their customers… that’s a market failure. We have one such in the USA in our banking and financial services industries and this article describes the interplay of the market and government and how it resulted in the mess we’re in.

What do we need to do to get out of this mess? Mr. Johnson details some steps to follow, but it’s up to Congress to accept or reject them. My guess is that if we don’t have some political courage in our Congressional leadership, we’ll see them rejected, with the ominous consequences to follow later.

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