Saturday, May 16, 2009

in a nutshell

Branko Milanovic:

The real cause of the crisis lies in huge inequalities in income distribution which generated much larger investable funds than could be profitably employed. The political problem of insufficient economic growth of the middle class was then “solved” by opening the floodgates of the cheap credit. And the opening of the credit floodgates, to placate the middle class, was needed because in a democratic system, an excessively unequal model of development cannot coexist with political stability.

–courtesy of i cite. Good to see articles reiterating stuff we learned from "The Giant Pool of Money", stuff that obviously needs to be reiterated, while simultaneously talking more directly and forcefully about income inequality as perhaps the most fundamental cause of instability. Shocking.

Reasonable sentiments also noted in the words of AWP.

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