> it's 10s, 100s times healthier
You mean, except in 2008?!
You mean, except in 2008?!
Of course, you think that 2008 was BAD. But this is not usable data. Compare how BAD was it compared to 1998 in Russia, for example.
As to how well markets functioned wrt the 2008 crisis - one question concerns credit rating agencies. If you believe that they didn't do their jobs well, then it should be troubling that they didn't go out of business, quite the contrary, it's the same small number of firms which still operate in this business. If you believe that they did do their jobs well, because the government bail-out resulted in most junk debt being repaid to creditors, then you essentially don't believe that markets function very well, as they seem to have made a correct calculation that they can extract money out of taxpayers through this junk paper, and that is not what any economist would praise as markets functioning for the benefit of society.
(Two counterarguments to the above that I heard are, the government caused the housing bubble in the first place, or alternatively the government helped smooth/stabilize asset prices, including housing prices, which is a proper use of monetary policy, and the paper was never "really" junk since housing prices rebounded later. Dean Baker argues against the latter based essentially on buying homes getting costlier relatively to renting them in bubble years. The former counterargument is voiced more rarely which is perhaps why I haven't heard a counter-counterargument. Anyway, I think this whole thing is a bit muddy...)
Well, it's not like the credit agencies bailed out the banks themselves. The version of the criticism I have heard was that the banks (and credit agencies) knew that the taxpayers will bail them out if they fail, and therefore they took unnecessary risk - making investments just as useless as the nails made by Soviet nail factories.
> a lot of criticism against US financial system is completely valid
http://www.theatlantic.com/past/issues/99mar/marketgod.htm
"The East Asians' troubles, votaries argue, derive from their heretical deviation from free-market orthodoxy -- they were practitioners of "crony capitalism," of "ethnocapitalism," of "statist capitalism," not of the one true faith."
Interesting reading.
"The biggest hope I had was that we would enter a new era of personal responsibility. Instead, we doubled down on blaming others, and this is long-term tragic."
http://nymag.com/daily/intelligencer/2015/12/big-short-geniu...
And having seen that things like interest only loans are still a thing, and very much still offered and applied for, I would tend to agree.
Or even better compare to china that might have to down grade its growth to "normal"...
I forgot what your point was...
Its an extreme oversimplification to say that 2008 was a US problem. It was a problem of international finance, the bulk of which (maybe unwisely) is done via US financial institutions and with US financial products. That a problem with international finance was linked to recessions globally is not surprising.
Similarly, if some systematic problem in international manufacturing appeared, the bulk of which (perhaps unwisely) is done in China, we would expect it to also have global ramifications.
It turns out that a financial problem in China is currently contained because it is not a major player in international finance (yet).
It wasn't a single country's recession, it was connected to the Asia's earlier crisis and oil price plummeting.
> I forgot what your point was...
You can read it above.
Last I checked it had nothing to do with oil, so please explain.
A better structured economy would have more competition and more bankruptcies. And fewer bailouts and government-arranged mergers.
The capitalist system must be able to purge bad decisions and investments naturally or it will eventually calcify like a centrally planned economy.
But several times the "bailout" kept the institution alive, but wiped out the shareholders. I thought that was at least somewhat reasonable. Wipe out the senior management too (which I don't recall whether that was done), and that might be about as good as can be achieved.