Finance Myths

[Crewleader]

February 14, 2011

The Wrong Crisis

Finance Myths

By DEAN BAKER

Most economists and financial experts would give the banking system in Spain high marks. It is well regulated and well capitalized. In September of 2008, when the financial world was melting down following the collapse of Lehman Brothers, Spain was relatively unaffected. Yet the unemployment rate in Spain today is more than 20 percent.

Clearly there is more to the story of the current worldwide economic slump than the flame out of Bear Stearns, Lehman, and AIG. But the Financial Crisis Inquiry Commission (FCIC), tasked by Congress with determining the causes of that slump, isn't giving us the more complete picture.

The problems with the FCIC's report, released at the end of January, stem from the Commission's very inception: it was focused on the wrong topic. The FCIC investigated risky investments, lax regulation, excessive leverage. And it downplayed the more mundane, but vastly more important, collapse of the housing bubble.

The FCIC was set up to investigate a sidebar rather than the real story. Given the definition of its mission, the Commission did a reasonably good job. However, its 662-page report is a distraction from the real reasons why 25 million Americans are unemployed, underemployed, or have given up looking for work altogether. The real story doesn't require 662 pages; it can easily be summed up in a few paragraphs.

We knew the bubble was coming . . .

http://www.counterpunch.org/baker02142011.html

[provis99]

1. there's something fishy about Spanish unemployment figures.

This 20% unemployment figure has been around for decades, never changing. Yet thousands of African immigrants to Spain are quickly getting jobs.