Tuesday, January 26, 2010

Bounded Bubbles

"Such regulations may, no doubt,be considered...a violation of natural liberty...But these exertions of natural liberty of a few individuals, which might endanger the security of the whole society, are, and ought to be, restrained by the laws of all governments, of the most free, as well as the most despotical."

Adam Smith,Wealth of Nations,quoted in John Cassidy How Markets Fail.

That is, speculative bubble-makers ought to be constrainted for the good of the whole -- the market, the people, the society. That's not such an unreasonable idea. Obama and the Feds should spend their time figuring out the right type of financial re-regulation and how to mitigate the continuing negative impacts of foreclosure and the credit crunch on small businesses and communities, especially communities of color. Wealth stripping and hyper-unemployment are having devastating impacts that will shape the American experience for decades to come.

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