| November 5, 2008 at 10:37 am
134 views | 2 Recommendations | 1 comment
Who of us understands the complexities of a debt economy? While it may be true that the modern economy is so complex, even in its fundamentals, that no one is really in control of it, this doesn’t mean that those who operate at high levels of manipulation are not culpable for the current crisis that afflicts the globe. Who is to blame? Why is it so hard to answer that and remove the heads off the offenders?
In getting a good run at answering that question, we need to take a step back and look at the system as a whole. The debt philosophy of the current capitalist model recommends that the more we have, the more we can stick our necks out in debt. It is a system based on leverage and thus on risk. We have all been trained to leverage our assets and enter into risky financial arrangements. It is part of our lives because our leaders do it, and they advocate the same to the people. It is a dangerous, speculative approach to fiduciary security.
One fundamental problem with this approach is that huge institutions can get away with unscrupulous use of leveraged assets because it is difficult to put a finger on a culprit in a huge organization. Blaming the individual for his individual mismanagement is simple. In an organization however, personal culpability is difficult to achieve. This presents an associated problem with individual morality. With the shield of diluted responsibility, those who hold high positions in huge companies are more easily protected, and thus can tend to be bolder, less careful regarding what their moral compass will allow them to do.
We can see this in the corrupt trend that the investment banking industry has been brazenly going down. Recall prior to the start of the Dot Com era when Venture Capitalists looked for legitimate companies to back, like AT&T, IBM, BP, and the like. These were real companies with real value. The SEC and the Banking industry demanded responsibility when it came to protecting the investor. Then came the sexy Dot Coms with nothing but glitz and glitter to show. They were like a pretty girl with no morals; fun for a moment, but with nothing substantial under their skin. The accounting industry, the Venture Capitalists, the SEC, the Investment Banking industry, the talking head anylists who got the public so cranked up, the Day Tech like companies who encourage you and I to stay home in our bath robes pumping our money into the system, all worked together to bilk the American public out of trillions and trillions of dollars.
This had been the biggest scam in global history. That level of skullduggery can't happen in a tea pot. The government had to have been involved in the scandal for it to have occurred at that level. But how can we put our finger on a culprit? Again, this is a problem. If the relative autonomy provided by an organization protects the criminals from identification and thus emboldens their amorality, how much more so in a huge, nationwide system of organizations that conspire together systemically?
So came the crash of the internet empires and of so many investment portfolios on the corporate and street level. Enron and QUALCOMM further shook our confidence in a system gone criminal. Even Martha Stewart dissapointed and mislead us, Give me a break! Once you let the genie out of the bottle, how do you get him (or her) back in?
In a whirlwind of activity, frame forward to September 11 and the fall of the twin towers. The economy in the <?xml:namespace prefix = st1 />US ground to a pain filled halt with the sound of screaming, tortured, overheated steel. The government turned first to the car industry if you recall, prompting manufacturers to practically give away new cars. Especially were the SUVs an easy purchase with huge cash back incentives.
As this temporary tactic wore down, tax cuts came next, and after that interest rates fell. The inception of 4 and 5 percent interest rate insanity succeeded in creating a groundswell in not only the US economy, but also stimulated the world. The troubled US was refinanced on the back of American private real estate. This turned out to be an even greater scam than the Dot Com experience. Who would have beleived that to be possible?
Who do we blame? How do we recover? Who can we trust anymore? Sometimes it seems like the problem is bigger than a man can fix. It seems bigger than an organization can solve as well. The trouble has even gone beyond the borders and power of a single nation, or even a group of like minded nations.
There are ideological conflicts between the managing elements of this world. The differing governing philosophies are not promising to work synergistically to avert further degradation of our market infrastructure. Commercially, capitalism unchecked can ad a slash and burn, survival of the fittest fatalism toward the future as the focus narrows to just the profits for today.
Most troubling of all, no one has even spoken of the real problems up to now. I’ve not read an honest analysis of the fundamentals, or heard one either. Can someone please stand up here and be honest about what’s really been going on?