Who's fault?
This cartoon is on Economist this week:
It is a real danger! The worst of this crisis is not recession, but reverse of progress! The world has set its march towards market economy for awhile, and this crisis might jeopardize it and put the entire world's economic growth for the future in real danger.
The root of the problem is not capitalism, but unregulated market and wrong executive compensation plan. CMO, CDO, and CDS are real financial innovations that bring more liquidity into the financial market. CMO in market will allow more people to access credit. But the perfect tool can be used wrongly like nuclear power. We have to regulate and price those derivatives properly going forward, but capitalism as a whole should be blamed for this problem. It is all too easy politically to blame everything on capitalism. Popularism might rule, and that is the real threat here to global economic health!
George Liu
george.j.liu@gmail.com
