the social scientist.

On Board the 'U.S.S. Titanic'

Nice Titanic metaphor. But, metaphors just provide another perspective. They do not explain, nor do they predict, nor do they provide solutions. The ship should have slowed down to not hit the iceberg. But it's hit the iceberg. Whether you put the band leader in charge or not does not affect whether the ship will sink or not. Paulson as band leader is not a good fit anyway, because as CEO of GS he was a player, and helping decide how fast the ship should go.

I have seen no mention of Marx's crisis of capitalism. This is a theory, and therefore an explanation, which produces predictions. The main prediction, which caused the theory to fall into disfavor was he predicted the collapse of capitalism followed by revolution of the workers. It didn't happen in the 1930's when we had the last crisis of capitalism.

The theory is essentially quite simple. If the owners of capital don't pay their workers the fair rewards of their labor, then those workers won't be able to consume all of the production (unless you lend them the money - my addition). There is an oversupply of production. Profits then fall. The capitalists look for new profit opportunities, i.e. new markets and colonies, now called globalization. The same problems occur again. Marx never thought of raw material supplies being limited, but their scarcity is clearly adding to the cost of business and lowering profits also.

We were there in the 1930's, but there was no revolution. We are there again, and there will be no revolution, because most people, including me, are sheep. Don't separate from the mob, because you will be culled. How do you like that metaphor? Here's another, inspired by Mel Brook's History of the World - the meek shall inherit the earth - 6 feet under.

Another Depression, no matter what politicians do? Quite possible. Even if they make credit available again, those who can afford to borrow don't want to. The others who need credit can't borrow. It doesn't look good. Can China save the day? Probably not. I figured out long ago that if China and India were to emulate the western growth path, the world would quickly run into Malthusian supply constraints. If the world can resume economic growth oil prices will go through the roof. Although there are many alternatives to oil, none are cheaper than oil, and they are all take lots of capital and time to put in place. The capital is cheap, but there isn't much available. This paradox is about the only new thing under the sun in this situation.

We live in interesting times.