Kruugman mistaken about what we learned

He complains:

"Even as the dot-com bubble deflated, credulous bankers and investors began inflating a new bubble in housing. Even after famous, admired companies like Enron and WorldCom were revealed to have been Potemkin corporations with facades built out of creative accounting, analysts and investors believed banks’ claims about their own financial strength and bought into the hype about investments they didn’t understand."

Potemkin firms and credulous bankers exist to maintain a semblance of normality while the rest of the components align for a restructuring. Then we get on with the unwinding, all at once with economies of scale.

Here is an update on the GS shenanigans:

"The Times article points out that unusually large contrary bets placed by Goldman and others were not primarily defensive. According to industry experts interviewed, these bets put the firms’ interests clearly at odds with their clients’ interests. Goldman says that its clients knew that it might place contrary bets. But does that excuse placing them? What goals, other than lining it pockets, were served by the deals?"

GM serves the unsustainable goals of the government mortgage insurance game. It is their job to force the bankruptcy.