... crisis, the collapse of Japan Inc.
after the stock market crash of 1990, the Asian crisis of the mid-1990s,
the fabulous technology boom/bust cycle at the turn of the millen-
nium, and the unprecedented ... 27
Figure 2. 1
04 020 0989694 929 0888684 828 0787674 727 0686664 626 0585654 52
15
10
5
0
−5
Year over Year % Change
The Great Inflation of the 1960s...
... excessive
uses of risk and concentration of investment. And the interplay of these
two flaws explains each of the major economic declines of the past
25 years.
In summation, the savvy analyst must be of two ... by the events of 20 08. Shock in hand, they can argue that
their sense of the way the world works is intact. Listen to speeches
from representative...
... kick
the football through the uprights and join the crowd of believers. And I
hem, Doc, and I haw. And, I twist and turn. But the crowd grows more rest-
less, and her gaze is enticing, and I ... responsibility? No.
The Fed was making two mistakes in the mid -20 00s. It failed to focus
on the housing bubble. And it ignored the absence of any tightening
of c...
... Global Markets Crisis • 151
080604 020 0989694 929 0888684 828 0787674 727 0686664 626 05856
20 000
10000
8000
6000
4000
20 00
In Billions of Chained 20 00 $s, Log Scale
Growth Is the Goal
and Growth Is the ... free market capitalism does the best job of
delivering growth to the citizenry of the world.
2. Financial system excesses are the root cause of many boom a...
... propose.
12
However, even amidst the imposing shadow of the 20 08 crisis, the
record of free market capitalism over the past 50 years is striking. The
postwar reality—good gains in living standards in the ... Much of the better than expected revenue
gains . . . have been tied to the stock market. . . . The risk is that
20 0 • T
HE
C
OST OF
C
APITALISM
1008060...
... More simply, the roots of the 20 08 financial markets crisis can be
found in mainstream economic theory and in the mathematical archi-
tecture of modern finance. Accordingly, economic theoreticians ... capital markets and the strong growth that they financed
gave rise to the long string of successes that were celebrated through-
out the 1990s and into the middle ye...
... to expand their def-
inition of excess if they want do better going forward.
The Markets Stoke the Boom and Bust Cycle • 23
Figure 2. 1
04 020 0989694 929 0888684 828 0787674 727 0686664 626 0585654 52
15
10
5
0
−5
Year ... crisis, the collapse of Japan Inc.
after the stock market crash of 1990, the Asian crisis of the mid-1990s,
the fabulous technology boom/bust...
... the loan has gone bust
and the bank now owns the home. But the loan was for $588,000, and
the house is worth $538,000. If lots of home loans go the way of
Hanna’s loan, then the total value of ... mismatch between saving and investing has a big
influence on the number of investment projects built and the timing
of the investment.
2
The clustering of...
... extrapolating markets predispose the economy to excessive
uses of risk and concentration of investment. And the interplay of these
two flaws explains each of the major economic declines of the past
25 years.
In ... with the Dow no
higher in the summer of 19 82 than in the fall of 1971. This presented
a quandary. Low inflation was a reason to be optimistic abo...