Everywhere you turn, billboards are advertising the failure of capitalism. Not literally, of course, but the equivalent. The view that the current financial crisis is always and everywhere a market failure is cropping up in the most unlikely places, including that bastion of free-market capitalism, Chicago.
The latest convert to the cause is Richard Posner, judge on the U.S. Court of Appeals for the Seventh Circuit, senior lecturer at the University of Chicago Law School and author of a new book, “A Failure of Capitalism: The Crisis of ‘08 and the Descent into Depression.”
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The Commerce Department reported Wednesday that US gross domestic product (GDP) plunged 6.1 percent on an annual basis in the first quarter of 2009, a far deeper decline than had been predicted by economists. Following a 6.3 percent decline in the last three months of 2008, the Commerce Department report registered the biggest six-month economic contraction in more than 50 years.
There is much to fear about a new virus. Less than a century ago, a major global flu pandemic cost millions of lives. We have all become more globalized and physically interconnected since then, and the amount of international travel today is remarkable — official estimates are that, at any one time, about 500,000 people are in airplanes. We also don’t know much about this new virus, except that it can spread quickly and in some instances can be fatal.
The Treasury plans to sell a record $71 billion in quarterly auctions of long-term debt next week as the government seeks to finance its unprecedented fiscal stimulus and financial rescue programs.