There are quite a few theories and a deepening economic debate swirling around. Even Marx is being selectively resurrected to help explain what is going on. Everything can contribute something, but the less useful parts merely add to the noise and confusion.
I think the situation is a little more simple than many portray, but it is ironically elusive to most people's minds as they distort their models to accommodate the new realities, which are little different from the old realities, at least in the historical context. Reform is a slow horse to leave the gate when the games are still fixed.
Fraud is, after all, a confidence game. But when confidence fails, all the con men have left is fear and greed, and the darker emotions that come with them. So let's talk about anything and everything except what really happened, and make that discussion as complex as possible. Let's not fix what is broken, in small manageable bites. Let's attempt to reinvent and reorganize the entire system. As in corporations, when management fails, time to reorganize and redivide the power amongst the power brokers, rather than actually fix anything.
The sad truth is that most economic models are artificial constructs that crush the life out of reality according to the bias of their authors, and are used to justify behaviours that are in the self-interest in whatever group that promotes them. This is because except for some very basic ideas, macro-economics is not a science, but much more significantly a public policy discussion with some mathematical relationships added, and those largely of a statistical estimation.
This is a long discussion and it is a bit dated. But it is useful to remember where we are on this turn of the circle, and how we got here.
We are in the hysteria period of the financial crisis, an uneasy calm wherein the facade of the system is restored, more or less, and people are attempting to ignore the wreckage and the victims. The winners are standing on their piles of loot, unwilling to give anything up.
But they are not at peace, because they do not or can not talk about how and why this crisis happened, and so cannot be sure that it will not happen again. And they know that a society that is not willing to help the weak will not be able to protect the wealthy.
The economic system was beginning to totter in the 1980's, but it started to slip off the rails in the late 1990's with the final pushes of free market fundamentalism with the unleashing of the derivatives market, and the repeal of Glass-Steagall. The derivatives market is a monster that still remains untamed.
One cannot have a sustainable economy where the Financial Services sector continues to take an inordinate share of national income and corporate profits, which some estimate to be as high as 40 percent. And that largesse is used to virtually control the very system that is set up to regulate and control it.
For those who simply must have an easy answer, here it is:
The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustained recovery.The descent to hell is easy, but to return to the upper air is always the real task, the labor, especially when your hellion guides continue to herd you about using greed and fear alternatively. How can one attempt to recover, when they do not even know where they are, and do not remember how they got there?
So, here is some food for thought, and what I hope might be an interesting conversation amongst some bright people who don't always agree with each other. But each makes sense in their own way, and contributes to what seems to be an honest discussion, which is a scarce commodity in these times of universal deceit.
