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It's Going to Get WorseIt's Going to Get Worse
Half a century ago, the economic historian Karl Polanyi argued in the classic book The Great Transformation that self-regulating markets never work and that government intervention always becomes necessary to prevent catastrophe. Buried toward the end of the book is a short but succinct sentence that describes much of what we are seeing on Wall Street today: The financial market governs by panic.1
July 1, 2008
Michael E. Lewitt
Half a century ago, the economic historian Karl Polanyi argued in the classic book The Great Transformation that self-regulating markets never work and that government intervention always becomes necessary to prevent catastrophe. Buried toward the end of the book is a short but succinct sentence that describes much of what we are seeing on Wall Street today: “The financial market governs by panic.”1
The first half of 2008 saw plenty of panic as investors and regulators scrambled to deal with unprecedented losses and the collapse of a major investment bank. Polanyi’s view is echoed today by George Soros, one of the most successful investors in history, in The New Paradigm For Financial Markets, a book published in May 2008...
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