DougM

We’ve Survived Worse Markets (and Economies) Before – the 1970s

Great reminder of how bad things were back in the 70s - most market participants don't remember them, though many *are* aware of what happened then and fear the return of stagflation. You put your finger on the main problem being DC "leaders" who are really followers of whatever polls tell them will get them reelected, and Wall Street bubble junkies just looking for their next fix.

I do believe that in many ways things are worse now; the entitlement bombs, long known about, are going off, and world-wide population pressures are going to strain natural resources including oil in ways that mere politically-motivated shortages won't. Unlike a lot of other developed countries, though, the US has ample natural resources to meet its own needs, and lacks only the political will to use them. Also unlike many others, our demographic picture is better because of our long-standing acceptance of immigrants. Canada, Australia, and New Zealand are similarly well-situated for what's coming, but are, frankly, better led than we are. We may have to endure another period like the 1970s before we shake off the death-grip of the current political structure.

Hank Paulson: Leading Us to the Next Bull, Soon

Unreasonable to blame Clinton. The GOP congress passed that bill after all. Plus G-S was irrelevant by that point anyway. The unregulated swaps market was already a growing problem even without the G-S repeal. Fact is, the real source of the systemic risk we now face is the swaps. Without that, many institutions could and would have been allowed to fail as they should, including Bear Stearns and AIG. While the swaps are the systemic risk, it needed a trigger, and for that, we need look no further than Alan Greenspan, who ignored shoddy lending practices and who held short-term interest rates too low for too long.

U.S. Records Another Huge Current Account Deficit

When you say that Bush and Congress should have acted to fix the current account deficit, what exactly are they supposed to have done? I see one concrete proposal hinted at in your article, which is a sensible energy policy. Beyond that, what?