First published: Prospect, 29/06/2008
J K Galbraith once observed that all financial crises produce similar responses: someone has to be blamed; there is a headlong rush to regulate and reform; and, amid the intense focus on the idiosyncrasies of the crisis, the thing that actually caused it all in the first place—speculation—gets overlooked. The celebrated economist, who died just over two years ago, would have recognised the credit crisis that began last year, and its aftermath, as entirely typical.
Accusations and the rush to regulate are all around, but there is little discussion about how we allowed speculative fever in housing and financial markets to become….more
