European exchanges have performed strongly in recent months. Second, the real medium-term danger for the global economy will be deflation rather than inflation. Even though policy-makers believe they have scope to ease monetary and fiscal policy, the experience of Japan in the 1990s suggests that such action may be more difficult than they think. A crash would have more profound implications, not least the rediscovery of the virtues of social democracy and the need for some curbs on the global money machine. A meltdown on Wall Street would be seen, rightly, as the crescendo of a period of financial turbulence that started a decade ago.
Some today say that the United States is just another Thailand waiting to happen.
At this point, it is traditional to say that a crash is to be avoided at all costs. Actually, a shake-out would not mean that the benefits associated with the new technologies would be lost, any more than the end of the railway boom in the 19th century put an end to railways. But crashes do have the effect of cleansing the stables. In the aftermath of the 1929 crash the policies of laissez-faire were cast aside in favor of controls on speculation and the financial system in general. Sadly, those lessons have been forgotten, with the result that we live in a state of perpetual financial instability.