The complete market failure to accurately assess the mounting system-wide financial risk being assumed by the private sector, while the market simultaneously assumed an uninterrupted rise in buying power and real estate values, feels like one big Groupthink-based-failure. Groupthink-encouraged-Wall-Street-adopted-bad quantum math equals a really big problem. So consider this the anti-Groupthink muse of outcomes to our financial crisis, and let’s start with a seemingly unrelated question:
Just how many political science students are hired by Wall Street?
The contempt with which such degrees are held by the captains of the global finance system may be tempered over time — since a 101 level political science survey course in ideology would have brought to the fore this quote from Karl Marx, written in 1867.
It should hang in the CEO’s office of every bank on the planet:
“Owners of capital will stimulate working class to buy more and more of expensive goods, houses and technology, pushing them to take more and more expensive credits, until their debt becomes unbearable. The unpaid debt will lead to bankruptcy of banks, which will have to be nationalized, and State will have to take the road which will eventually lead to communism.”
When does anti-consumerism become a conservative value?
When did over-consumption become associated with free markets?
Did it happen when former President Bush asked everyone to go buy something after 9-11?
When and where did frugality, living within your means, saving to buy something become old-school?
The new financial instruments that created a 38:1 loans to capital ratio, which were so “sophisticated” even the Wall Street analysts could not track or understand them, will cause a backlash against complex financial debt instruments, should the bottom really fall out of the U.S. economy.
If there is widespread economic devastation because Wall Street and others could not track, understand, control or otherwise even consider the failure of each new debt instrument that they invented, it stands to reason there should be new rules for those playing in the physics lab.
If the trillions of dollars in new obligations the U.S. government has assumed in the last six months, and the trillions of dollars in new money it has printed or electronically dumped into the global markets do not right the listing ship – then the Federal Government’s future may look like IOU-issuing California, a bankrupt Central American government with too many debts, or more likely, a debased U.S. currency that spurs super-inflation, further devaluing the U.S. currency, and which will destroy those who bought our debt.
Either way, the flight to real property or bartering systems — in the face of the end of the U.S. currency — could be in the future.
Why should not these possibilities be on the list of possible end-game results of our financial crisis?
We are living in a world where the unlikely seems more likely – the end of CITI Bank, GM, Ford, and Chrysler are on the table as likely outcomes in the near term.
What business school graduate, economist or business executive, for example, would have thought Marx’s prediction would today look so insightful?
The chest-beating for consumerism and consumption, should be tempered — and whether most of us like it or not, such tempering may be forced upon many, as the economy continues to spiral in.
Having said all that, I’m thinking Arizona will take the Super Bowl, and will someone please pass the chips and dip – like now?