This Age of Bubbles - NYTimes.com

This Age of Bubbles - NYTimes.com

Paul Krugman:"The latest financial turmoil raises a broader question: Why have we been having so many bubbles? For it’s now clear that the flood of money into emerging markets [...] was yet another in the long list of financial bubbles over the past generation. There was the housing bubble, of course. But before that there was the dot-com bubble; before that the Asian bubble of the mid-1990s; before that the commercial real estate bubble of the 1980s. That last bubble, by the way, imposed a huge cost on taxpayers, who had to bail out failed savings-and-loan institutions.The thing is, it wasn’t always thus. The ’50s, the ’60s, even the troubled ’70s, weren’t nearly as bubble-prone. So what changed? [...]
The obvious culprit is financial deregulation - not just in the United States but around the world, and including the removal of most controls on the international movement of capital. Banks gone wild were at the heart of the commercial real estate bubble of the 1980s and the housing bubble that burst in 2007. Cross-border flows of hot money were at the heart of the Asian crisis of 1997-98 and the crisis now erupting in emerging markets - and were central to the ongoing crisis in Europe, too.
In short, the main lesson of this age of bubbles - a lesson that India, Brazil, and others are learning once again - is that when the financial industry is set loose to do its thing, it lurches from crisis to crisis."