- The system started to go haywire more than twenty years ago when Reagan replaced Volcker as head of the Fed with Greenspan; this ushered in the decline of regulation.
- Deregulation was codified in 1999 with the repeal of Glass-Steagall, which had built a wall between commercial and investment banking.
- Next was an SEC decision in 2004 to bump the debt-to-capital ratio of investment banks from 12:1 to 30:1.
- Then we had a failure of the accounting profession and credit rating firms to do their jobs properly.
- And the October bailout added to the problem because it did not address the fundamental causes.
Tuesday, December 09, 2008
System Failure
In Vanity Fair, of all places, Joe Stiglitz diagnoses the system failure that he feels led to the current economic crisis.
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