Edward Harrison — Macro outline of causes and effects of and predictions for the global financial crisis

The global economy is in an economic depression. This post is a brief outline in bullet points of my macro view of that depression and the global financial crisis which caused it. I highlight causes, effects and predictions. My goal here is to help me crystallize what the real issues are and how they are likely to play out. I think framing the problem in macro terms could be a very useful exercise. Please chime in with your comments and criticisms.

Read it at Credit Writedowns
Macro outline of causes and effects of and predictions for the global financial crisis
by Edward Harrison

I am in general agreement with the analysis presented in this outline. However, I think that an important causal factor is not sufficiently emphasized.

Given the work of Bill Black and others, a major causal factor seems to have been control fraud along with intellectual, regulatory and even to a degree state capture by the financial sector, whose power and influence has grown along with its increasing portion of GDP.

This is incorporated somewhat in point # 2, but not explicitly enough to avoid the conclusion that it was government that is to blame and not the institutional structure that has joined government and large corporations at the hip, e.g., through lobbying and the revolving door.

So I would expand point #2 to include crony capitalism, corporate statism, and outright corruption.