2010-06-09 08:55:53

PAUL VOLCKER: ‘The Time We Have Is Growing Short’

Filed under: Economy
Posted by: Purple State of News

Call me old-fashioned, but I still have a high opinion of Paul Volcker, the former Fed Chair who has been been head of the Economic Recovery Advisory Board at the White House, but no longer seems to have much of a voice in the administration. In light of financial events in Europe, with a growing sense of instability in markets, reflected in the up and down lurches in the Dow in the past few days, his concerns here in the New York Review Of Books strike me as potent and worrying.

More and more people seem to believe we’re headed for a double dip recession. Is that another word for the Depression?

“Now we know that trillions of dollars of official funds came to the rescue of the broken system in the form of loans, capital, and guarantees,” Volcker writes. “Flows of finance have been restored, albeit with large areas of continuing public support. The residential mortgage market in the United States—by far the largest sector of our capital market for the time being—remains almost wholly a ward of the government. Now, another range of uncertainty has arisen. Sovereign credits have come into question, most pointedly in the Eurozone but potentially of concern among some of our own states.

Any thoughts—any longings—that participants in the financial community might have had that conditions were returning to normal (implicitly promising the return of high compensation) should by now be shattered. We are left with some very large questions: questions of understanding what happened, questions of what to do about it, and ultimately, questions of political possibilities. The way those questions are answered will determine whether, in the end, the financial crisis has, in fact, forced the changes in thinking and in policies needed to restore a well-functioning financial system and better-balanced growing economies.”

For the rest, have a look here.

Comments (0)

No Comments »

No comments yet.

RSS feed for comments on this post. TrackBack URL

Leave a comment

Name (required)

Mail (will not be published) (required)

Website