Friday, June 27, 2008

How to Stop the Next Bubble

A roundtable from Prospect Magazine:
The financial crisis has shown that markets are bubble-prone and that laissez-faire regulation doesn’t work. The authorities need to get a grip if we are to avoid a mega-bubble. But we may need an even deeper crisis for that to happen

Mark Hannam
has worked for the Bank of England, Citibank and Barclays;
Jonathan Ford (chair)
is deputy editor of Prospect;
John Gieve
is deputy governor for financial stability of the Bank of England;
Martin Wolf
is chief economics commentator at the Financial Times;
Anatole Kaletsky
is an economic commentator and associate editor of the Times;
George Soros
is chairman of Soros Fund Management
JONATHAN FORD (CHAIR): I want to start by asking where we are in the crisis. Is it over? George Soros, you have said that this is the worst crisis we have been through for 60 years. Presumably you still believe that there is worse to come?
GEORGE SOROS: There is now a widespread belief that the crisis is over. I think, on the contrary, that the effect on the real economy is yet to be felt. The measures taken by the authorities will not bring recovery. There are four reasons for this. First, the fall in house prices in the US is only halfway over and in Britain it has hardly begun. Second, consumers have been slow to adjust their spending habits, but this is about to happen....MORE