It’s been a few days since we looked into the Financial Crisis of ’08, which in the current Internet news cycle is pretty much the equivalent of a few months. Paul Krugman, the Nobel prize-winning NYT columnist, says that it’s going to get worse before it gets better. The President seems to be talking a lot but at this point pretty much no one is listening. And the original bailout was a bad idea so now they’re trying a new one. However, as of yet no one has really explained where all the money went (other than to partridge hunts in England, but even that couldn’t account for it all). Until now! Today we turn to another Carney for explanation (and yes they’re related…apparently it’s all the result of some ambitious breakfast experiment). Per Tim Carney writing today at Culture 11:
So, what the heck happened to all that money? Did somebody take it?…Not really. Most of the wealth we “lost” was wealth that never really existed. The core of our loss is that home values and expected future home values are not as high as people had thought. From that fact, there is a ripple effect that has frozen credit markets and brought down stock prices. That’s not to say there isn’t real loss in our downturn. It’s also true that some people are making money off of our woes. But the heart of the story is mis-valuation.
So basically we’re having a real crisis based on imaginary money, which begs the question who exactly put these people in charge? At some point someone may also be able to explain why we can’t now use fake money to bail us back out.