Thursday, October 13, 2011
More sense from Nouriel Roubini
How the lessons about the need for prudential regulation of the financial system were lost in the Reagan-Thatcher and growing inequality is leading to social and political unrest. Contrasts this with three decades of relative social and economic stability, from the late 1940s until the mid-1970s, a period when inequality fell sharply and median incomes grew rapidly. (An era, of course, when housing was affordable and plentiful - unlike now.) He warns: 'Any economic model that does not properly address inequality will eventually face a crisis of legitimacy. Unless the relative economic roles of the market and the state are rebalanced, the protests of 2011 will become more severe, with social and political instability eventually harming long-term economic growth and welfare.'