Let's take this pause to examine several alternative "frames" for "this crisis", and what candidate solutions each one would suggest. In every case except psychological, we need to distinguish perceptions from reality.
One view is that something has "broken" in the global system to extend credit to responsible borrowers, and it needs to be "fixed." Perhaps what has broken might break more, and we need more attention and adrenaline.
A different lens would say that the credit business is a symptom, not a "root cause." What is broken is psychological, a global sort of unjustified panic, and what we need is to calm the panic and then everything will be fine again. Actually, less attention and way less adrenaline would be good in this scenario. "Nothing to see here folks, false alarm." A calm voice, a firm hand on the helm, a sense of authority would be good, we can all go back to watching television.
A third view is that this is a crisis of "social capital." In that view, what has bottomed out is "trust" and delayed gratification. What has replaced those is distrust and a "me first, right now" mood.
Psychological issues and passing unjustified anxieties can be calmed by the media - although the voice from the box seems to be crying "panic now!" Financial systems might be improved with more "regulation", or possibly by letting American ones fail and relying more on global ones with less credulity that are still strong.
But the issue of a sudden realization that we have no social capital left remains. To the extent this is the root cause, we have a much different problem here, calling for different solutions.
This seems to me to be the case, as each year's Federal Budget takes longer and longer to get passed, with bickering and paralysis replacing negotiation and reasoned discussion and even horse trading.
Negotiation and deals require trusting the other party to keep their promises, and that seems to be gone.
If that is the problem it is a huge one, and the wrong parties are at the table. All those social scientists and all those subjects we've been throwing out of the curriculum because they were not "math" or "science" are more relevant than high finance. We need cultural anthropologists. We need to understand the role of religion and morality in building trust in the future, and, for that matter, a thought for the future in present decisions.
The bailout bill will not address this latter problem. It's the wrong frame.
Before solving the problem in one frame, let's be sure it's the right frame, and that we're solving root causes, not symptoms, because there's not much ammo left in the box. There's only so many more trillion dollar rescue plans before we are, sadly, broke.
One view is that something has "broken" in the global system to extend credit to responsible borrowers, and it needs to be "fixed." Perhaps what has broken might break more, and we need more attention and adrenaline.
A different lens would say that the credit business is a symptom, not a "root cause." What is broken is psychological, a global sort of unjustified panic, and what we need is to calm the panic and then everything will be fine again. Actually, less attention and way less adrenaline would be good in this scenario. "Nothing to see here folks, false alarm." A calm voice, a firm hand on the helm, a sense of authority would be good, we can all go back to watching television.
A third view is that this is a crisis of "social capital." In that view, what has bottomed out is "trust" and delayed gratification. What has replaced those is distrust and a "me first, right now" mood.
Psychological issues and passing unjustified anxieties can be calmed by the media - although the voice from the box seems to be crying "panic now!" Financial systems might be improved with more "regulation", or possibly by letting American ones fail and relying more on global ones with less credulity that are still strong.
But the issue of a sudden realization that we have no social capital left remains. To the extent this is the root cause, we have a much different problem here, calling for different solutions.
This seems to me to be the case, as each year's Federal Budget takes longer and longer to get passed, with bickering and paralysis replacing negotiation and reasoned discussion and even horse trading.
Negotiation and deals require trusting the other party to keep their promises, and that seems to be gone.
If that is the problem it is a huge one, and the wrong parties are at the table. All those social scientists and all those subjects we've been throwing out of the curriculum because they were not "math" or "science" are more relevant than high finance. We need cultural anthropologists. We need to understand the role of religion and morality in building trust in the future, and, for that matter, a thought for the future in present decisions.
The bailout bill will not address this latter problem. It's the wrong frame.
Before solving the problem in one frame, let's be sure it's the right frame, and that we're solving root causes, not symptoms, because there's not much ammo left in the box. There's only so many more trillion dollar rescue plans before we are, sadly, broke.
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