After decades of being celebrated as one of the hallmarks and virtues of American-style capitalism, “financial innovation” has come onto hard times.
Soon after the financial crisis began in 2007 and 2008, certain instruments of recent high finance – the collateralized debt obligation (CDO) and the credit default swap (CDS), as leading examples – were blamed by the media, the public, many policymakers, and even by some top economists for nearly bringing the U.S. and global financial systems and their economies to their knees.
It didn’t take long for financial innovation more broadly to be condemned.
New York Times columnist and Princeton professor Paul Krugman, for example, has asserted that it was “hard to think of any major recent financial innovations that actually aided society, as opposed to being new, improved ways to blow bubbles, evade regulations and implement de facto Ponzi schemes.”
To read the full, original article click on this link: The Death Of Financial Innovation In America | Gov Monitor
Author: By Robert E. Litan
