Saturday, October 9, 2010

Crony Capitalism Comes Home

I always got a chuckle about how the US laughed off the financial panic in Asia in 1997-98. The were lots of "it couldn't happen here" comments.

Well... here's a blog post from Paul Krugman and I don't think many are still claiming "it can't happen here":
After the Asian financial crisis of 1997-1998, it was often said that a key barrier to recovery was the uncertain state of property rights: so much debt had been run up during the boom, and there had been so many defaults in the bust, that it was no longer clear who owned anything. Plus, these countries lacked clear legal procedures, and in general suffered from insufficient rule of law. All this was said, of course, in a tone of superiority: we Americans had solved such problems.

Or maybe not. Reading Mike Konczal’s crystal-clear explanation of the mortgage/foreclosure mess, you have to say that Thailand and Indonesia 1999 had nothing on America 2010. You really have to wonder how all this gets resolved.

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