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What (and Who) Got Us Into This Mess?—A Q&A With Michael Lewis, Editor of Panic: The Story of Modern Financial Insanity

If there’s one lesson to be learned from Panic, it’s that investors should be terrified by combinations of the words “fundamentals,” “economy” and “strong.”

Q. What would you recommend?

A. The bailout needs to start from the ground up. Much of what’s going on is driven by the falling real estate prices. Falling house prices are driven by people who are having their houses foreclosed upon, which increases the supply of houses on the market. The bailout money should be used to stabilize the economy at the individual level and keep those people in their homes.

Q. Do you think it’s likely that another panic will occur?

A. Well, we’re having panics every day now. The markets are doing the weirdest things, and they’re going to continue to do the weirdest things for a long while—probably nine months, maybe more. This is the long panic. Do I think that U.S. financial markets will get themselves in a whole new problem in the next decade? Yeah, probably. But I think it will take a while because it requires people to be willing to take risk in the first place. People are going to be very unenthusiastic about risk for a while. It will take some years before we forget this experience.

Krista Walton is an assistant editor of Preservation magazine.

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