Austrian economics was right !
Here is a poster of Lehman's boss, Dick Fuld, which has been autographed personally by the disgruntled former employees who now have to find somewhere else to work.
Most amusing is the quote up top in the middle - "Austrian economics was right !"
This issue to me, the issue of whose theory of economics holds up to rational inquiry, to the historical evidence, is the most important issue of our time. Austrian economics correctly and accurately predicted the implosion of communist economies back in the 1920's. It has a superb track record and in my opinion, it deserves some serious consideration.
We've seen the problems with big government, with socialism, with Keynesian economics, with fractional reserve lending and central banking.
Many people would be well served by reading up on some Rothbard, Hazlitt and von Mises. The von Mises blog is an excellent source of analysis and insight into today's affairs from an Austraian perspective. Today's article has a great summary of the turmoil swirling around the financial markets:
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What's Behind the Financial Market Crisis?
The financial crisis is not over. Neither tax rebates nor low interest rates nor higher or lower exchange rates can do the job of reviving an economy that is burdened by debt loads that are too high. On the contrary: the policy measures that the US authorities have been applying will prolong the agony. Be prepared for the challenges of extended financial turmoil and economic stagnation.
Early this year, the US central bank decided to manage the debt crisis in the light-hearted belief that a few aggressive rate cuts would "unfreeze" the banking system. Yet as of the end of the third quarter of 2008, the arteries of the financial system are still cluttered, and the financial system has moved even closer to total collapse.
Those banks and brokerages that haven't yet failed have been kept alive by emergency monetary transfusions from the US central bank. The Fed has cast away all restraints of economic rationality and is acting in a purely political way. The Board of Governors of the US Federal Reserve System is pursuing the goal of getting the financial system through the mess — at least until the end of the year, no matter how high the costs will be thereafter.
The American central bank has adopted the financial equivalent of the military strategy of scorched earth. The economic philosophy of the current chairman of the US Federal Reserve System can be summarized in the slogan, "No depression under my rule!" He resembles a military leader who stubbornly declares, "No defeat under my rule!" the more the chance of victory is slipping away, and defeat can be denied no longer.
The current economic disaster is the result of the combination of negligence, hubris, and wrong economic theory. For decades, an economic and monetary policy has been practiced based on the illusion of, "It doesn't matter." At first it was, "Deficits don't matter." From that, the policy of "it doesn't matter" got extended to money creation, the credit expansion, the stock-market bubble, and the housing boom. Now, we're being told that buying financial junk by the central bank to beef up banks and brokerages also doesn't matter.
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