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Would somebody get a message up there to Washington that we are not living in the years of the “Kennedy era”. We are not experiencing the “Savings and Loan” crisis. This is not anything like the “tech bubble” of the 80’s and it certainly is not the same as other contractions, recessions or “bubbles.”
When these and other events occurred, the brilliant minds of those times constructed solutions, for better or worse, that met the necessities and parameters, strengths and weaknesses as well as the facts of those times and events. That is not today and not the situation we face now.
As the rampant speculation occurred before the Great Depression, it created some of the same weaknesses and fractures in the economy that we are experiencing now. But, never have we faced the strange development of unfounded asset classes and false “currencies, securities and credit products” that underlie this situation.
Never before this time, did financial and economic systems move at the speed that our new technologies have allowed. At no other time have the economic foundations of so many countries, businesses, individuals and markets been inexorably linked to the absurd creation of speculative products and constructed asset groups as they are now. And, at no other time has credit been the only currency of value throughout huge sectors of economies.
First of all, it was stupid to make credit as the standard dominant currency of value throughout the system because it only works under a specific and concrete set of prime conditions. Not given each and every one of those conditions, the system fails. It has no real flexibility to accommodate real conditions and changing economic environments.
Second, it was wrong to allow unregulated, unsecured and unmanageable false forms of assets to be created, traded, sold and used to prop up the economies of entire groups of financial systems. It was also wrong to sell and trade in credit based products where the potential for systemic damage could permeate the entire economy in the event of failure to meet prime conditional system requirements. That is to say, solutions that work only under prime and perfect conditions are not solutions at all, nor strengths, nor plausible foundations in the “real world”. They are destined to fail sooner or later.
Third, it was delusion and illusion, the reality of strong growth and prosperity was not founded in reality but in the degree to which leverage could be made against questionable assets. This is the most detrimental part of the illusion that was created because the real value of the currency system did not accommodate the total value of extensions of currency through credit products. It wasn’t innovative – it was criminal.
Fourth, it was failure in the making partly because it drove real innovation away and partly because it allowed third-rate players to participate with poor thinking skills and even poorer decision-making skills and ethics at the exclusion of genuine strengthening and innovation in every arena. Everywhere from business decisions within corporations to stock market level decisions to the research and development decisions to banking and investment decisions among others were manipulated by those who did not have the ability nor desire to understand the long-term implications of their decisions.
Fifth, it was restrictive and destructive to the opportunities of the great majority of the world’s population, especially in the United States, to benefit a few that were involved in “the game.” For the advantage of a very small proportion of the people alive today, this game was constructed to extremely advantage that elite population while the vast majority of the population found their real money buying less, their wages lower, their opportunities destroyed, their families and many family members enduring poverty, and their quality of life undermined.
And, sixth, it was absurd and bizarre behavior, choices and decisions that yielded the economic crisis that we are experiencing across the world. At no time has more been required by so few in order to prop up their egos and lifestyles. Even the kings of Europe in the glory days of the sixteenth century knew to curb their vices and leave crumbs for their populations to eat. That has not been the case today. There was nothing to curb the vices and greed and perverse passions of this small elite population that has run the entire world economy and the greatness of the United States into the ground.
This day and time is unique in the underlying dynamics and facts of the current situation. It is also going to take unique and appropriate corrections to fix it. This will require the construction of these solutions using all that we know, all that has worked before and all that has not, and all the possibilities of what might work with the creative application of knowledge and understanding that we can muster. Then it will take the flexible application of workable solutions with real-time dynamic custom-fitting as we go. And, I believe we can do that.
– cricketdiane, 02-16-09