Two great reads: (1) Dr. Som Basu’s1article in the current Journal of FSP (November 2009) entitled “The New Economy,” offering fresh insights to the Great Credit Bubble of 2008, and (2) Brian Wesbury’s2 book, It’s Not as Bad as You Think–Why Capitalism Trumps Fear and the Economy Will Thrive.
Both writers are fervent capitalists, and both provide fascinating (and different!) insights as to what happened to the world economy during the last two years (the credit crisis arguably began in July and August of 2007, although only a few actually spotted what was happening at the time), and what future changes may or may not ensue. Wesbury quotes Groucho Marx, whose remarks which could easily apply to some of Som Basu’s conclusions: “Politics is the art of looking for trouble, finding it, misdiagnosing it, and then misapplying the wrong remedies.”
The Great Depression is surprisingly related — a recent PBS documentary discusses not only the economic collapse, but, importantly, the easy credit available to buy homes, refrigerators (new and electric), air conditioning (same!) and, of course, investing, where one only needed $1,000 to buy $10,000 worth of stock. Speaking of that speculative bubble, Groucho Marx appears in the in the PBS program, as does son Arthur. Find and record the program (online, or check TIVO — many good PBS shows seem to be endlessly repeated — and look for The Crash of 1929. Find it, and you may also discover why Groucho made the quote in Brian Wesbury’s book.