9 of 30
BACKNEXT
Robert Shiller
Robert Shiller
Arthur M. Okun Professor of Economics at Yale University and author of Subprime Solution and Irrational Exuberance

As the financial crisis unfolded on the weekend of September 13, I was on Clam Island writing my New York Times column. My goal was to propose a long-term fix to the basic causes of the problem, but I was also worried about another Great Depression. That is not an overstatement. I was incredibly anxious.

Up until that point the government had prevented anything from happening that would really frighten people, and Lehman was possibly going to be the first institution not bailed out. The government was taking a gamble by letting such a venerable firm go under because no one could predict the systemic consequences. And as we saw, markets froze.

Since then the threat of an institution failing has been eliminated. While this is important in the short term because it prevents further collapse, the too-big-to-fail mentality worries me in the longer run. Risk management will be constrained artificially by convention. It impresses me how much convention dictates action. Confidence has come back more than I expected, but unfortunately at the same time we are losing our capitalist roots. The government is running industries and banks. I would like to see some inspirational move back to free markets.

NEXT: Whitney Tilson: Played out as predicted

Last updated September 14 2009: 3:19 PM ET
Email | Print | Share  |  RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
More Galleries
50 years of the Ford Mustang Take a drive down memory lane with our favorite photos of the car through the years. More
8 CEOs who took a pay cut in 2013 Median CEO pay inched up 9% in 2013 to $13.9 million. But not everyone got a bump last year. Here are eight CEOs who missed out. More
10 best convertibles now that spring has sprung It's finally time to put the top down. Here are our 10 favorite rides for the warmer months to come. More
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.