Laissez-Faire Capitalism Has Failed

Nouriel Roubini, 02.19.09, 12:01 AM EST

The financial crisis lays bare the weakness of the Anglo-Saxon model.

It is now clear that this is the worst financial crisis since the Great Depression and the worst economic crisis in the last 60 years. While we are already in a severe and protracted U-shaped recession (the deluded hope of a short and shallow V-shaped contraction has evaporated), there is now a rising risk that this crisis will turn into an uglier, multiyear, L-shaped, Japanese-style stag-deflation (a deadly combination of stagnation, recession and deflation).