Common Ground

Larison, summarizing the real cause of the current slow-motion meltdown:

The trouble arose because of the effective collusion between government agencies and investment banks on the one hand (allowing the latter to become horribly overleveraged), and because of large-scale government involvement in the housing market through the government-backed mortgage lenders and loose monetary policy on the other.  The latter made possible the creation of the housing bubble, while the extraordinary risk-taking that the government backing of the lenders permitted helped make the bubble larger than it would have otherwise been and ensured that it would collapse more violently.

Note the rampant intervention shot throughout.  The finance “industry” & the federal government have a closer relationship than conjoined twins, yet somehow the narratives competing for play are “Free market economics has FAILED YOU!!” in the lead, with 2nd place by a lap being “This is why you don’t give loans to ni– oh, excuse me, minorities”.

BTW: the “credit crunch” reference the media keeps making is nowhere near accurate.  There was a massive GLUT of credit until recently, and in the fallout adjustments are suddenly snapping the other direction.  This is just another piece of the puzzle that is the fundamentally nonsensical nature of our economy, as without the constant goosing and waves of SPEND SPEND SPEND!!!  THE SKY SHALL RAIN CASH!!! and the use of the result of such as a chair — heh, more like one of those spinning bar stools with no seat on top — fluctuations would be comparitively no big deal.  When huge amounts of debt are not seen as legitimate investment, the State cannot create new money on a whim, and property is real & valued as such, stability is rightfully seen as a good thing & blowing resources you don’t even have is rightfully seen as fucking stupid.  What we have is a pyramid scheme, all because some folks have a fascination with large numbers & lack the capacity to expect them to mean anything.

No, in the immediate term I do not know how to get there from here.  This isn’t the type of adjustment you can make quickly, or neatly.  In all honesty, that we didn’t think about this before says a lot, much of it of the type future civilizations will look at and dismissively giggle about.

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About b-psycho

Left-libertarian blogger & occasional musician.
This entry was posted in economics, philosophy/life. Bookmark the permalink.

One Response to Common Ground

  1. vache folle says:

    In a century, folks will look back on this mess and liken it to the tulip bubble of a couple of centuries ago.

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