It’s broken, fix it.
50 years from now, assuming there will still be schools and history classes, teachers will have to be very creative when trying to explain the banter around the current systemic crisis. The kids would be asking how could a whole civilization stand before a plain and simple reality and looked through it as if it wasn’t there.
For start, naming. Financial crisis? Hello? 25% of mammals endangered, bees disappearing, massive climate change, global food shortages, and the man tells us we need to “restore consumer confidence”? Hell, no. Consumers have very good reasons to be worried. If anything, its time to shake their confidence. And with that, shake up some industries. In fact, some industries should probably follow whaling and leach farming. The current market turmoil is not, as some politicians and media experts would like us to believe, a freak consequence of convoluted mortgage schemes. It is an inevitable outcome of a fundamental property of markets: they predict the future. A market is a huge computer, combining the computational power of masses of machines and brains to project economic value into the future. The price of a firm’s stock doesn’t stop at its current assets, but reflects its expected amortized income over its expected lifetime. At least that’s what I was told at my high school economics class. So what should happen to the stock of a car company on a planet that is running out of petrol, or the legitimacy to use it? What would you expect of a mortgage bank in a planet where geography and climate is shifting in unpredictable patterns?
The recent bank bailout plans are equivalent of hosing a burning house with diesel. What we really need is to dowse the fire, throw out the parts that are beyond repair, and start rebuilding to a solid, sustainable standard.