Checking the BBC News for interesting insight into the ongoing credit crunch affecting the world economy at the moment, I stumbled across an excellent opinion piece penned by Sir Evelyn de Rothschild discussing why the U.S., the U.K., and the E.U. have so spectacularly fallen off the reservation financially. This 2008 credit crunch, on the heels of the 2007 super-spike in food, fuel, mineral, and commodity prices, has signaled a final death knell to the free market euphoria hedge fund manager George Soros dubbed “market fundamentalism.” The rate of credit in the economy has expanded much faster than the real economy. The end result has been a glut of worthless financial instruments invented in the midst of the sheer folly of the speculative mood.
Sir Evelyn de Rothschild, scion of one of the oldest banking families in Europe, offers some well-considered perspective on the worsening crisis. I will go through and re-post his words in italics, and then make some of my own comments.