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Volcker says this could be worse than the Great Depression

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Former Federal Reserve chair and current presidential adviser Paul Volcker says that the global economy may be deteriorating even more precipitously than it did during the Great Depression.

"I don't remember any time, maybe even in the Great Depression, when things went down quite so fast, quite so uniformly around the world," he said at a Columbia University luncheon. He also dismissed the notion that the financial innovation of the past decade has had any positive results: "There is little correlation between sophistication of a banking system and productivity growth."

Volcker believes that greater regulation of institutions large enough to post systemic risk is necessary, and also wants to see a move toward more uniform accounting standards -- a step that is hard to argue with and probably should have happened a long time ago, regardless of the recent meltdown.

It's just a shame that more people weren't talking about these problems -- innovation without a purpose other than self-enrichment, opaque accounting and large banks operating as glorified hedge funds -- before they destroyed the world.

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Last updated: November 24, 2009: 09:49 PM

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