Very interesting article on the bubble and its bursting

Club Troppo, one of the most interesting Australian blogs around, has published a link to a very interesting story in The Atlantic with the following introduction:

Henry Blodget was a Merrill Lynch tech analyst during the tech bubble. A bubble he rode to fame and then to a Spitzer investigation and oblivion. In this piece in the Atlantic he gives a great analysis of what he thinks caused the current housing and debt bubble and draws the conclusion that the problem is systemic and largely unavoidable in the long run in free-market capitalism.

The Atlantic article starts with:

The magnitude of the current bust seems almost unfathomable—and it was unfathomable, to even the most sophisticated financial professionals, until the moment the bubble popped. How could this happen? And what’s to stop it from happening again? A former Wall Street insider explains how the financial industry got it so badly wrong, why it always will—and why all of us are to blame.

The article is very interesting as giving a potentially plausible rationale for the bubble’s inflating and bursting.

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