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Friday, April 23, 2010

Must read editorial by Paul Krugman

A lot of people loathe Paul Krugman; Wall Street for one and most conservatives as well. That's a ringing endorsement in my eyes. He also predicted the economic collapse as early as 2006 both frequently and eloquently.

Read Don't Cry for Wall Street.

So why were bankers raking it in? My take, reflecting the efforts of financial economists to make sense of the catastrophe, is that it was mainly about gambling with other people’s money. The financial industry took big, risky bets with borrowed funds — bets that paid high returns until they went bad — but was able to borrow cheaply because investors didn’t understand how fragile the industry was.

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