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Roy Cropper

Maybe I am naive but I have always felt that the core problem was the expansion of the money supply. In effect banks had oodles of cash because of policies implemented by national central banks. They had to do sthg with this incerases in their reservse so they lent it out,loosening the criteria for lending out money. If one bank didn't do this they lost out to their neighbouring banks. Banking bonuses may have grown excessively as part of this competition. Plus if they didn't lend more then govts harried them into doing so, whipping up popular support by blaming the banks for pushing the economy toward recession for not "lending enough". In the UK the Brown govt was spouting such nonsense even in the early 2000's after the crash of the dot com boom.

Yes the market had its role but the core problem was the expansion of the money supply in the first place. If that hadn't happened - if credit had not been expanded as excessively as it was thru central bank manipulation - the boom would not have occured. But then the western economies would not have recovered so quickly from the dot.com boom (or gone into that boom in the first place).

aje

Roy - I agree completely. I think the expansion of credit is the root cause.

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