Sober readings on the financial crisis

Two must reads if you’re worried about a repeat of “It” (the Great Depression, that is).

One is by a former chief economist of the IMF.  The other is a kind of “puff piece” in praise of Timothy Geithner on the “victory” of Obama’s economic team over the crisis.

To some extent both articles discuss the uncertain state of the “toxic assets” in the balance sheets of the big American banks.  The stock market has nonetheless seemed to pronounce that the health of the banks is much better now than a year ago, but not so good that we can say that life post-crisis is already “normal.”  There may well still be hidden “events” that can turn things for the worse for the the American and global economies.  But the financial reform legislation (Volcker rule, a tax on on overly expanded bank balance sheet) may well help inspire more confidence.

Despite the residual uncertainty, or because of it, we should try to reach for a Taleb disciple with whom to have a beer.  Maybe that way we will survive the next bubble/crash that no one can yet  sketch out definitively.

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