The quotable Paul Krugman: What we’ve learned over the last ten years

What was truly impressive about the decade past, however, was our unwillingness, as a nation, to learn from our mistakes.

Even as the dot-com bubble deflated, credulous bankers and investors began inflating a new bubble in housing. Even after famous, admired companies like Enron and WorldCom were revealed to have been Potemkin corporations with facades built out of creative accounting, analysts and investors believed banks’ claims about their own financial strength and bought into the hype about investments they didn’t understand. Even after triggering a global economic collapse, and having to be rescued at taxpayers’ expense, bankers wasted no time going right back to the culture of giant bonuses and excessive leverage.

Then there are the politicians. Even now, it’s hard to get Democrats, President Obama included, to deliver a full-throated critique of the practices that got us into the mess we’re in. And as for the Republicans: now that their policies of tax cuts and deregulation have led us into an economic quagmire, their prescription for recovery is — tax cuts and deregulation.

Read Krugman’s whole column.

Comments

[Shawn McDonald]

The ENRON scandal did not spring from deregulation. The California energy commission act that you call deregulation in fact had two distinct parts. Half of it WAS deregulation. The other half was uber-regulation including price caps.

ENRON (and AES and Reliant) exploited the REGULATIONs, not the deregulations. With no fear of price hikes (aka free market capitalism) CA energy users had no incentive to conserve energy. It was just another government subsidized handout. (cough+publicoption+cough)

This triggered CA utilities to make less energy to avoid losing more money.

That's when ENRON et al. put the screws to the out of state feeds from the grid they controlled by bending the state of CA over a barrel.

When wholesale prices exceeded retail prices thanks to REGULATION Enron et al. could screw the state, but not the end users... who eventually got screwed by the blackouts and brownouts.

Thanks REGULATION!

[actor212]

As much as I admire Krugman, I have to disagree.

We did learn from our mistakes. As Peter Cook used to add, "that's why we keep perfecting them."

But seriously, I maintain to this day that the housing bubble was a desperate attempt by George W Bush to prop an economy that has, for thirty years, worked against the average middle and working class American. It was the latest in a series of crumbs tossed to us, like making it easier to invest in the stock market thru 401Ks, rather than provide real defined benefit pensions or relaxing credit card restrictions (and wait until THAT bubble bursts, if you think things are bad now), that created the illusion of wealth that kept consumers spending.

By hyperinflating the value of homes, we all felt like millionaires. And we were, if we beat the game of musical chairs.