AlterNet: How Economists (and Pundits and Politicians) Helped Steer America Off a Cliff

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How Economists (and Pundits and Politicians) Helped Steer America Off a Cliff

By Joshua Holland, AlterNet. Posted February 12, 2009.

Dean Baker, one of few economists who warned of the housing market's impending crash, discusses where we should go from here.



As the economy crashes around us, Dean Baker's star has been on the rise, and for good reason.

While most of his colleagues were following the herd, swept up in the irrational exuberance of an economy fueled by the growth of a massive housing bubble, Baker, co-director of the Center for Economic and Policy Research, was one of the few voices warning of the housing market's impending crash.

When AlterNet interviewed Baker in mid-2006, there was no talk of "subprime" loans and "toxic securities," yet he warned that the crash of America's "debt bubble" -- mortgages, consumer debt and all the rest -- could decrease Americans' average wealth by as much as 40 percent.

At the time, he said that he hoped he was wrong, but unfortunately he wasn't.

In his new book, Plunder and Blunder: The Rise and Fall of the Bubble Economy, Baker explains the rise of the speculation-fueled bubble economy following the relative prosperity of the New Deal era, offers insight into how so many of his colleagues could have gotten the situation so wrong, and calls out politicians, pundits and corporate America for getting us into a mess that's threatening the entire global economy. .......(more)

The complete piece is at: http://www.alternet.org/workplace/126507/how_economists_%28and_pundits_and_politicians%29_helped_steer_america_off_a_cliff/