The last two lines of the original manuscript of my book JOHN MAYNARD KEYNES (Palgrave, 2007) was written in July 2006. In those lines I noted that “when, not if, the next Great Depression hits the global economy, then perhaps economists will rediscover Keynes’s …analytical system that contributed the golden age of the post World War II. For Keynes, however, it will be a pyrrhic victory”.
November 7, 2008 Open Letter to World Leaders attending the November 15 White House Summit on Financial Markets and the World Economy
Dear World Leaders:
The Winter of 2007-2008 will prove to be the winter of global economic discontent that marks the rejection of the flawed ideology that unregulated global financial markets promote financial innovation, market efficiency, unhampered growth and endless prosperity while mitigating risk by spreading it system wide. For more than three decades mainstream neoliberal economists have preached, and regulators have accepted, the myth of the efficiency of unregulated markets, ignoring the critical lesson provided by John Maynard Keynes’s analysis of interconnection of financial markets and the international payments system.
After posting his article “Pompeii and Henry Paulson” on RGEMonitor.com, Chris Carroll has indicated to me that the purpose of this article was to “spur Bernanke to try to provide his own views… My suspicion …is that he [Bernanke] thinks buying the toxic assets is a bad idea …. I think Bernanke believed all along […]
Remember that the original Paulson bailout plan and the major function of the revised TARP rescue legislation is an attempt to prevent massive insolvencies in financial institutions that have, on their balance sheets, “securitized” assets (e.g., Mortgage Backed securities [MBS, CDOs, credit default swaps ,etc] that had become virtually illiquid as the market for these […]