The Fruits of Civilization (26-9-2) The Post-War World continued


The economic malaise that afflicted the world at the end of the 1970s birthed a reactionary revolution in politics in the US and UK, with Margaret Thatcher in Britain and Ronald Reagan in the United States promising to “roll back the welfare state” that had supposedly sapped the animal spirits of free enterprise. They wistfully wished for a return of the vigor of 19th century capitalism, conveniently forgetting that it was the golden age of robber barons, not public prosperity.

Reagan loosening regulation resulted in a savings and loan (S&L) crisis (1986–1995), where 1/3rd of the 3,234 thrift institutions in the US went bankrupt, owing to incompetence and fraud.

The banking problems of the ’80s and ’90s came primarily, but not exclusively, from unsound real estate lending. ~ American economist William Seidman, head of the US agencies tasked with cleaning up the S&L mess through government largesse

Unsound real estate lending would lead to the next severe recession 2 decades later. But before that, 2 asset bubbles were blown and burst.