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Here is how Wikipedia describes Milton Friedman:
Here is how Wikipedia describes Milton Friedman:
According to The Economist, Friedman "was the most influential economist of the second half of the 20th century…possibly of all of it". Alan Greenspan stated "There are very few people over the generations who have ideas that are sufficiently original to materially alter the direction of civilization. Milton is one of those very few people."In his 1962 book Capitalism and Freedom, Friedman advocated minimizing the role of government in a free market as a means of creating political and social freedom. In his 1980 television series Free to Choose, Friedman explained his view of how free markets work, emphasizing his conviction that free markets have been shown to solve social and political problems that other systems have failed to address adequately. His books and columns for Newsweek were widely read, and even circulated underground behind the Iron Curtain. (...) His views of monetary policy, taxation, privatization and deregulation informed the policy of governments around the globe, especially the administrations of Ronald Reagan in the U.S., Brian Mulroney in Canada, and Margaret Thatcher in Britain.And this is how über-bear Nouriel Roubini describes the crisis we are entering:
I would argue this is the worst financial crisis the U.S. has had since the Great Depression. We haven't seen this type of real financial turmoil for the last 70 years. Of course, it's not going to be as bad as the Great Depression. But this isn't your typical run-of-the-mill recession that in the last two episodes lasted only eight months with a minor contraction in output. This is going to last at least 12 months and more likely 18 months, which is something we haven't seen in decadesThe Wall Street Journal's David Wessel Chimes in:
On the Richter scale of government activism, the government's recent actions don't (yet) register at FDR levels. They are shrouded in technicalities and buried in a pile of new acronyms. But something big just happened. It happened without an explicit vote by Congress. And, though the Treasury hasn't cut any checks for housing or Wall Street rescues, billions of dollars of taxpayer money were put at risk. A Republican administration, not eager to be viewed as the second coming of the Hoover administration, showed it no longer believes the market can sort out the mess."The Government of Last Resort is working with the Lender of Last Resort to shore up the housing and credit markets to avoid Great Depression II," economist Ed Yardeni wrote to clients.And for the maraschino cherry on the whipped cream topping here is this from Martin Wolf, chief economist of the Financial Times:
Remember Friday March 14 2008: it was the day the dream of global free- market capitalism died. For three decades we have moved towards market-driven financial systems. By its decision to rescue Bear Stearns, the Federal Reserve, the institution responsible for monetary policy in the US, chief protagonist of free-market capitalism, declared this era over. It showed in deeds its agreement with the remark by Josef Ackermann, chief executive of Deutsche Bank, that “I no longer believe in the market’s self-healing power”. Deregulation has reached its limits.(...) If the US itself has passed the high water mark of financial deregulation, this will have wide global implications. Until recently, it was possible to tell the Chinese, the Indians or those who suffered significant financial crises in the past two decades that there existed a financial system both free and robust. That is the case no longer. It will be hard, indeed, to persuade such countries that the market failures revealed in the US and other high-income countries are not a dire warning. If the US, with its vast experience and resources, was unable to avoid these traps, why, they will ask, should we expect to do better?(...) we must start in the right place, by recognising that even the recent past is a foreign country. (emphasis mine)Nouriel Roubini says,"
Of course, it's not going to be as bad as the Great Depression."Now, it is really difficult to be more pessimistic than Professor Roubini and it would be impertinent for me to try... I would only say that it is going to be "different" from the Great Depression.
I think that I probably factor in a lot more intangibles than a scientific economist like Roubini would think proper to. I see this discrediting of America's philosophy of finance as just another element in the general discrediting of the United States as a brand. As Martin Wolf says,
"Until recently, it was possible to tell the Chinese, the Indians or those who suffered significant financial crises in the past two decades that there existed a financial system both free and robust. That is the case no longer."In the same way that "shock and awe" is "no longer. Or that Guantanamo and Abu Ghraib and the value of the dollar "no longer" represent anything "free and robust". There is more than one way to go bankrupt.
All these different elements affect each other in so many negative, mutually magnifying ways, that, in their turn, have so many variables themselves, that to predict with precision the outcome of all this would be like predicting next year's weather. Forgive me if I incur in the sin of quoting myself from a few days back:
What do you call it when many problems, all with many intersecting vectors, each with its own conflicting internal contradictions, all of them in mutual contradiction with each other, all of which then line up like planets in a malignant horoscope? A series of thesis and antithesis with a dialectical result that can only produce a sinister synthesis? The US military calls this construction a "clusterfuck"; sometimes known by the NATO, phonetic-alphabet acronym, "Charlie-Foxtrot". The United States finds itself at this moment immersed in full-spectrum, multilayered, universal, clusterfuck of historic proportions.The way I look at things, this is our Berlin Wall.
Since the 1980s we have been living in the world of Milton Friedman. His theories are not surviving this crisis. For some people on the right this will disrupt and shred their intellectual certainties to the same degree that the fall of the Berlin Wall did to the certainties of many on the left.
This is certainly not the end of the world. Look at Russia. They will probably never be as powerful as the USSR was and like us they still can't make a decent car, but after a few perfectly horrible years, they are dong ok.
Like them, we'll still have the atomic bomb and people will still be afraid of us and with good reason, but nobody will think we are cool anymore.
I think I'll kind of miss that. DS