Martin Wolf on "rational panic"
Writing in today’s Financial Times, Martin Wolf, the newspaper’s Chief Economic Commentator, says he now understands how the 1930s depression could have come about:
“All one needs are fragile economies, a rigid monetary regime, intense debate over what must be done, widespread belief that suffering is good, myopic politicians, an inability to co-operate and failure to stay ahead of events. Perhaps the panic will vanish. But investors who are buying bonds at current rates are indicating a deep aversion to the downside risks. Policy makers must eliminate this panic, not stoke it.”