ferguson

What if the Credit Crunch Is Just a Symptom?

I am not an economist and the economic arguments presented here escape me. Common sense tells me the following.

-- People cannot continue to consume at an ever increasing rate unless their wages keep pace. Since wages have not kept pace, problems were inevitable.

--The securitization of mortgages and all of the related derivitaves had the effect of expanding the money supply without a commensurate increase in the value of the asset base. The imbalance meant that problems were inevitable.

-- The value of the financial industry is said to be only about 4% of GDP. Yet, at its peak, the financial industry represented more than 20% of the value of the S&P. This disjunction meant that problems were inevitable.

-- The increase in value of the financial industry in relation to everything else was driven largely by the vast opportunities resulting from the creation of a global economy and the boundless and irresponsible greed of corporations and individuals to reap the rewards for their own private benefit rather than the general welfare. Problems were innevitable.

-- Basking in the seemingly limiltess potential of globalization, securitization and expansion of the money supply without pain or consequence, our elected and appointed officials, all beneficiaries of the windfall, either missed the boat, were asleep at the watch, or just took the money and ran before the ship went down or, perhaps, all three.

-- The trillions of dollars that have been lost will not be restored until meaningful relationships between value, reward and cost are re-established.

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