Posted May 13, 2009 04:47 pm CDT
Judge Richard Posner says he probably misspoke when he advocated less government intervention in the private sector.
Posner, a judge with the Chicago-based 7th U.S. Circuit Court of Appeals, tells U.S. News & World Report that he should have added a qualifier. “I’ve always been a strong supporter of deregulation, and I should have said deregulation in everything but banking,” he says.
The banking system is different, he says, because it’s “the arterial system of the economy. If you don’t have bank borrowing and lending, almost all economic activity will take a severe dive.”
Posner spoke to U.S. News in an interview to promote his new book, A Failure of Capitalism: The Crisis of ‘08 and the Descent Into Depression. The book examines the origins of the banking crisis in terms that lay readers can understand, according to a Washington Post review.
So who’s to blame for the economic downturn? “Primarily the deregulation movement—people like me who didn’t carve out banking from the other industries to be deregulated,” Posner tells U.S. News. “But also the Federal Reserve under [Alan] Greenspan and [Ben] Bernanke for having pushed down interest rates so far that it caused a housing bubble. …
“And when that bubble bursts, it not only brings down the housing industry but it brings down the banking industry because the banks are almost partners in real estate because so much of the purchase price of a house is in the form of a debt, a loan from a bank.”
The New York Review of Books says A Failure of Capitalism is “a partial success” that gets some things right and some things wrong. “More striking than what the book says is who says it,” the review says. It notes that Posner has written several books and essays. “Judge Posner evidently writes the way other men breathe,” says the reviewer.
Posner is writing updates to his book on a blog hosted by the Atlantic called A Failure of Capitalism.