A good guide to the current financial crisis

[trixtah]

This Guardian excerpt of a new book by Paul Krugman, The Return of Depression Economics, is the most concise summary of the background to the current US (and world) financial problems I've yet found. It's very handy cheat sheet that discusses the major inputs, such as the property market, bundled loans, international financial trading and so on. His solution? "...anything that has to be rescued during a financial crisis, because it plays an essential role in the financial mechanism, should be regulated when there isn't a crisis so that it doesn't take excessive risks." Simple, really.

The current financial crash was not caused by banks, and the regulations that ensured that banks had sufficient capital did not apply to other financial institutions performing lending and trading functions. So if a financial institution can not reasonably cover themselves, they should not be playing.

Also, completely unrelated, I love the Guardian website. You can sign in with a profile, which doesn't hold any personal data, but which allows you to post comments to many articles and blogs, and, most importantly, allows you to take "clippings" of articles that interest. I have to confess that nearly all of mine are recipes, but it's damned handy having such a convenient reference.