Cost of Financial Crisis as High as $120,000 for Each American

Eduardo Porter counters the arguments against financial reform by providing a compelling view of the recent financial crisis that plunged the country into “an abyss from which it has not yet fully emerged.”

Pointing to a recent report on the 2007-09 recession, Porter states that it “offers a panoramic view of the variety of ways in which the financial crisis diminished the nation’s standard of living.”

Deregulation is not the solution: “Increasing the industry’s costs and reducing its profits is an objective of the regulation overhaul, not a bug. The goal is to ensure that banks internalize the costs of their risky business rather than have them borne by the rest of society.”

“The Fed economists refrained from adding up the disparate costs from their analyses — which could risk double-counting losses. But simply adding the cost from the drop in well-being of the unemployed to the impact on G.D.P. would take the price tag to up to $120,000 a person. And that still leaves out many other measures of loss.”

“Every time you hear about the need to balance the costs of new financial regulations against their benefits, it might do well to think about that.”

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  • pbrower2a

    It’s the preceding speculative boom that did the harm. It devoured capital that could have made America richer and more productive, and the economic meltdown simply exposed how destructive the officially-backed hustle was.

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