Experts Fear Repeat Of 1929 Economic Crash

Kuttner blames “insiders with conflicts of interest” for meltdown danger, tanking of dollar

Paul Joseph Watson
Prison Planet
Tuesday, October 16, 2007


Two prominent economic experts have warned that “insiders with conflicts of interest” allied to the Fed’s policy of tanking the dollar to bail out Wall Street could lead to a repeat of the economic crash of 1929, during a segment on Bill Moyers’ PBS show.

“I think there are three big parallels between what happened in the 20’s and what has been happening in Wall Street lately,” Robert Kuttner told Moyers.

Kuttner is a veteran economic journalist and a former legislative assistant in congress.

“One is insiders with conflicts of interest that are not fully disclosed to the public generally, secondly – there’s much too much borrowed money….particularly in the financially engineered parts of the economy….and third is the lack of transparency – regulators and the public don’t get any kind of disclosure,” added the former BusinessWeek writer.Kuttner blamed an economy based on “asset bubbles” for the rising tension in the markets and said that, similarly to the 1920’s, “engineered euphoria” and companies cooking the books had combined to endanger the safety of the economy.

A clip of the PBS discussion, for the full video, click here.

Kuttner called for more transparency and slammed the Fed for recycling a vicious circle of cheapening the dollar to bail out Wall Street, inviting another round of speculative excess.

“The risk is that every time we repeat this cycle, we get bigger and riskier bubbles. And with the dollar being in the tank– it’s not a costless kind of bailout,” said Kuttner. “One would have thought that if the dollar were down to 140 Euros there’d be a run on the dollar. We’re gonna see inflationary pressures as a result of the cheap dollar. So it’s not as if the Fed can simply print more money to bail out these excesses, and there be no cost to everybody else.”

William Donaldson, the former chairman of the Securities and Exchange Commission, also warned that the dollar was “disappearing” through the floor as a result of the Fed’s policy of bailing out “devious” investors.

So I think that the central banks have a greater technique and ability to meet this problem,” said Donaldson. “But insofar as they do– we run into a moral hazard, i.e. we bail out the people who made bad or devious, or whatever you wanna call ’em, investment decisions. So you sort of are saying, “Go ahead and do whatever you want, and you can count on the good old Fed to bail you out.”


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