Reblog: Systemic Folly

Financial Reality

John Hussman’s weekly letter to shareholders properly lays the blame for the economic Armageddon which is coming:

I feel it is important to emphasize – as we move toward recession – that we shouldn’t blame what is happening here on capitalism or free markets. We really have only a caricature of those here. We have a system that is constantly eager to abandon the proper role of government in the markets – which is effective regulation of risk – and to substitute it with the worst role of government in the markets – which is absorbing losses for those whose losses should not be absorbed, and pursuing policies tilted toward the constant creation of speculative bubbles and the avoidance of required economic adjustments, rather than the productive allocation of capital.

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