Desperate times, sensible measures

The ruin of America's great private financial institutions requires decisive but thoughtful government action if the coming depression will be a short one. Effective reregulation would only make for a good beginning. A new regulatory regime would be a necessary but insufficient condition for addressing the problems which have produced the most recent crisis. The situation requires something more. Steve Fraser, a historian of Wall Street, agrees, and rightly asserts that the

[s]tringent re-regulation of FIRE is not enough anymore. Washington's mission may, at this late date, be an even greater one than Roosevelt's New Deal faced. The government must figure out how to deploy its power to shift the flow of investment capital out of the mine-fields of speculative paper transactions and back into productive channels that will help meet the material needs of American society. Real value must be created in place of chimeras. In the meantime, we all have ringside seats — in fact, far too close to the action for comfort — as another gilded age is ending. What comes after is, in part, up to us [link and emphasis added].

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