The subprime crisis and the credit crunch are, in an important sense, the result of our failure to effectively reform corporate governance after the last set of scandals.
John Edwards recently came out with a corporate reform plan, but it didn't receive a lot of attention. Corporate governance still isn't regarded as a major political issue. But it should be.
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Krugman at his best. I often find financial pieces confuse me more than the situations I'm trying to understand. When he's on, Krugman can cut through the confusion to get to the heart of the problem. As he points out here, he's also often right about what's happening, and what's likely to happen. I'm grateful to whoever posted this. It's the most illuminating piece I've seen on American financial markets in recent weeks. It's also interesting and very well-written.
Since the corporate person, with the consent of the American people, is rewarded for "looking good", while neither doing good nor doing well, major changes in corporate governance need to be imposed. Krugman says it well and without referring to the old SNL skit about it being better to look good than to feel good.
Decent basic plea for more discussion of this topic from the presidential candidates. But precious few solutions given.
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