To the editor:
As an economist who started out in physical science, I've always studied the economy in terms of physical production and consumption - what economists call the real sectors. I am constantly amazed by how much these straightforward activities can be messed up for long periods of time by opaque disorders in the financial sectors. But that's what happened in spades during the Great Depression of the 1930s and in the various Asian currency collapses of the 1990s.
Macroeconomists I trust say it now may be happening worldwide, in a rolling deflation of all financial assets and a drying up of investment financing. The real economy hasn't been hit very hard yet, but there is every reason to fear that much worse is yet to come, and that it will be prolonged. It all could have been prevented by regulating the financial excesses and corruption that led to the collapse - but that was blocked by "pro-market" deregulation ideologues in the Bush administration and in the Federal Reserve and in previous administrations. Yet things are so bad now that even the Bush administration is carrying out truly massive interventions.
Meanwhile, the real sectors are frittering away the 10-year window of opportunity we have to do something significant about global climate change.
And in the midst of all this economic and ecological danger, our country is arguing about a distracting vice presidential selection and seems on the verge of electing yet another Republican ideologue who supports economic deregulation and foot-dragging on climate change.