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Thomas L. Hutcheson's avatar

I like a lot of this. Of course the financial crisis was not cause by bad mortgages. It was 100% created by the Fed that refused to keep inflation up to target. Yes many financial sector firms would have, should have lost all their equity, but not more than a few house owners, no unemployment, etc.

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Benjamin Cole's avatar

Excellent post, but I will have to read a couple more times.

I also wonder about the global "capital glut."

One response: There are no bubbles, no shortages and no gluts. Only supply and demand.

But...in fact, many nations globally suppress consumption, and funnel non-market savings money into investments, China being the prime example but also Germany, Singapore, any number of Asian nations. I have to say, this strategy seems to work.

Having "too much" capital might not be a bad thing, but I suspect then returns on investments are artificially suppressed.

I have reservations whether the US employee classes have benefitted from the last 50 years of globalism.

Foreign capital buying the best real estate to live in...that is what happens in Third World nations...and now the US and Greece too. Of course, this problem is exacerbated by the outlawing of new housing construction in much of the US.

Michael Pettis has an interesting take on international trade, and I think a worthy one.

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