Animal Spirits

A quick link to an interesting article by Robert Shiller: A failure to control the animal spirits, commenting on the nature of capitalism, where it has brought us so far, and whether or not it needs “radical surgery”.

We have seen these stories come and go in rapid succession in recent years. We first had the dotcom bubble and the envy-producing stories of young millionaires. It burst in 2000, but was soon replaced with another bubble, involving smart “flippers” of properties.

This mania was the product not only of a story about people but also a story about how the economy worked. It was part of a story that all investments in securitised mortgages were safe because those smart people were buying them. Those enviable people who are buying these assets must be checking on them, therefore we do not need to. We need only run alongside them.

Apparently, the property market has been the latest sector in which capitalism could excellently thrive and later evolve. On the waves of the property market’s success, the next capitalist hype (mania, bubble, whatever you call it) emerged. And with a little help from some risk-seeking investment bankers and brokers (also referred to as big swinging dicks), developing derivative products and selling snake oil, this capitalist baloon was blown up until it burst.

Interesting read.

(I like the picture too…)