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Politics : Idea Of The Day
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To: IQBAL LATIF who wrote (19256)8/11/1998 9:07:00 PM
From: Technopeasant  Read Replies (1) of 50167
 
Thanks for posting the latest Krugman article.

Got me to thinking about the financial system being "dangerously efficient". I totally agree. Instantaneous news, money flows, 24 hour trading etc do mean that when a panic starts, or even a lower level "concern", the global markets respond much more quickly than any national government can hope to. I suppose we all want some international agency to do what national governments can no longer do.

These is another side to this. The dangerous efficiency also means that genuinely positive steps taken to change direction will have a much quicker pay back. The markets will respond more quickly to the upside, as well as to the downside. The potential exists to cycle through the old boom-bust very quickly. I remember years ago reading that a recession generally ran its course over a 2-3 year period. I suspect a future recession may be of considerably shorter duration. I heard a bear today talking about 8 or 9 down months!
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