Word: us
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Dates: during 2000-2009
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...troubles? Hardly. The Asian tsunami of 2004 killed more than 200,000 people. And our financial meltdown quickly spread around the developed world. Yet from our lofty perch overlooking the 20th century - the American Century, TIME's co-founder once labeled it - the fall has been precipitous. Who among us is unscathed? Not many. Even if none of your family members died in combat, you had no money with Madoff and you own your house free and clear, you most likely still took a hit. To paraphrase the question Ronald Reagan posed years ago, Are you better off today than...
...economic narcissism was certainly the culprit in the devastation wrought by financial markets, which have subjected us to an increasingly frequent series of crashes, frauds and recessions. To a great degree, this was brought about by a lethal combination of irresponsible deregulation and accommodating monetary policies instituted by the Federal Reserve. Bankers and financial engineers had an unsupervised free-market free-for-all just as the increased complexity of financial products - e.g., derivatives - screamed out for greater regulation or at least supervision. Enron, for instance, was a bastard child of a deregulated utilities industry and a mind-bending financial alchemy...
...capital. The chief executives of these firms argued vociferously for the right to greater leverage and vociferously against regulating derivatives because, they claimed, unfettered markets were more efficient. Yes, it was the unfettered use of leverage and derivatives that destroyed their companies and wreaked havoc on the rest of us...
...facing the music now. Toughen up borrowing requirements by banks. Increase oversight, especially when it comes to regulating derivatives. Perhaps enact a 21st century version of Glass-Steagall. And don't allow any institution to become too big to fail. Does that mean some countries may get ahead of us in terms of financial innovation? Sure, but so what? For much of this decade, both England and Iceland were considered friendlier to capital markets than the U.S. England is now threadbare; Iceland is bankrupt...
...positive heading into the 2000s, we are almost certainly too negative heading into the next decade. But that's not such a bad thing. It means we will be collectively reluctant to lard on massive debts. It means we will be wary when some mortgage man tries to sell us an exotic loan predicated on our house's doubling in value. It means we will see "financial innovation" for what it often is: an oxymoron. And most important, it means we will take more seriously our responsibility to address problems now rather than later. (See which businesses are bucking...