Friday, July 29, 2011

Democracy Crisis

I've long felt that while we need a better science of markets and economics in general, one that embraces ideas from other areas of modern science and brings economics up to date, this will never be enough. The recent crisis wasn't just a puzzling episode, a strange and unpredictable financial hurricane; it emerged directly out of the deep influence of financial industry money on governance. There's no solution to financial stability without good governance.

It's a depressing read, but this long essay by Numerian paints a rather bleak -- and all too realistic -- picture of US democracy. Plus some perspective on the debt-ceiling crisis (which I don't pretend to understand in any detail):
"Financial Armageddon may not ensue from this downgrade – the market may just have to get used to the benchmark “risk free rate” being less than stellar, because there is no alternative in market size and liquidity to US Treasuries. Still, it will be a landmark event – an exclamation point to the closing out of the American Century."  (h/t The Agonist)