Subprime mortgages were not at the core of the global crisis; they were only indicative of the dramatic mispricing of virtually every asset everywhere in the world.
CR cites this as proof that “we’re all subprime now!” This is true … but it also suggests that “we’re all Japan now!”
Two decades of stimulus and deficit spending haven’t exactly done wonders for Japan. I don’t know which approach, austerity or heroic stimulus, will give the best results in the long run … but I do wonder why anyone could reasonably expect short-term economic growth in Ireland, Greece, Spain, the U.S., or just about any country that benefited from the massive economic distortions of the bubble era.
Well, maybe Malawi. I’ve read about the success of their subsidized fertilizer program.
