One thing that bothers me a great deal is that in spite of perhaps the largest asset bubble of all time, many seem to believe the solution is a return to pre bubble practices.
For example, I sometimes listen to WZLX (Boston) in the morning. The radio station runs many adds the encourage home equity borrowing and other pre-recession business practices that were questionable. It is hard for me to believe that anyone would take these adds seriously.
The same is true for government policy makers. It is like these folks have run out of ideas and can only redo over and over again the practices of the past.
This quote sums up nicely my thoughts on the matter:
"... in tackling credit problems in housing and elsewhere, eternally misguided policy makers are striving to reinflate financial bubbles to create an illusory wealth effect to encourage spending patterns that were toxic to begin with."
Abelson, Alan, 2010. Off the scrap heap. Barron's, Nov. 20.
One o the benefits of a recession is to impress the need to change old ways. As I have written several times, my view is that there has not yet been enough financial pain to cause meaningful change.
Until changes happens at all levels of society, a low growth jobless recovery might last a long time.
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