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What Really Happened To The Economy

Exploring A Truth Behind The Noise

Numbers?

Any accountant will tell you, numbers are only as accurate as the people who tweak them. Economists, macroeconomists, news commentators, wall street spokes-holes, financial analysts, brokers and your dad can all explain the causes behind the largest financial meltdown since the great depression. They'll tout numbers, systems, financial instruments, policies and politics, and they'll be right. But those things are the causes, not the reason.

rea-son [ree-zuhn]

-noun

5. normal or sound powers of mind; sanity.

The pursuit of more makes people do curious things. But that's always been the case. If prostitution is truly the oldest profession, then pimping is the second oldest, which brings us to the completely predictable, yet embarrassingly sad set of circumstances which led to so many innocents around the world being tipped on their heads, financially speaking.

Human nature hasn't changed, nor will it. Sociopaths have existed throughout history and come in all shades of grey. Individuals who take actions to benefit themselves to the direct and explicit detriment of others are scary in their own way, but only have so much power. The increasing power wielded by for-profit corporate entities, however, is enormously frightening. As they salaciously engorge themselves with incomprehensible mountains of cash, they have become an unnatural force and game changer with respect to your personal finances on a global level. The phrase "Too big to fail" comes to mind.

For-profit conglomerates are in business to make money, which is great, so am I. But the culture in a corporate environment varies considerably than sitting around at my kitchen table. Hundreds, sometimes thousands of people are competing to improve the financial outlook of the company. The moves people have to make sometimes can be brutal. Decisions are made unabashedly, with the corporations best interests first and foremost, which is okay, until choices are made that favor profit over common decency and basic human responsibility.

Now pretend for just a sec that you're an unbiased observer. You're from Mars and while you've been studying humans for eons, you have no emotional or financial investment whatsoever.

You've watched civilizations rise and fall, and you've noticed that many of these great nation-states shared conditions and motives which led to their ultimate demise. You recognize the behavior patterns that play out over and over again. You have developed and actually employ a rare gift known on earth as "common sense".

Why else would people lock their doors when they leave for work or don oven mitts before pulling hot bread from the oven? Seems simple doesn't it?

So when you look at the completely out-of-control financial instruments that brought down Bear-Stearns, Lehman Brothers and literally hundreds of others, do you blame the paper with the ink on it, the greed that spawned it, or the apathy that let it happen?

Prior to his "shocked disbelief" statement to the House oversight committee, Alan Greenspan believed that banks and financial markets needed little oversight, and would self-correct. Apparently Mr. Greenspan never played "Monopoly". Self-Correct? Really?

Did Mr. Greenspan also believe that the guy who robbed you at gunpoint last year was simply a borrower and intended to pay you, the lender, back with interest?

Look, there's a few things we all know, whether we like to admit it or not. There are good people and bad people. There are bad people who are capable of doing good things, and good people, who under the right circumstances, can behave badly.

I mean c'mon people, you've read the stories about the Ford Pinto Memo and now the Toyota recall.

It's very clear.

CORPORATIONS ARE IN IT FOR THE MONEY

They don't care about you, your spouse, your kids or your mom, they only care about your money. Even accidental death is considered as a mitigating factor in cold fiscal terms.

Is every corporation bad? No, of course not, but you don't get as big as some of those guys are without a little evil. And you all know that too.

But let's not depersonalize this, money is not the root of all evil, it's the PURSUIT of money. And let's face it, the whole money dynamic makes some people just absolutely lose it.

We don't have traffic signals because the lights are pretty

People didn't care, bottom line. And some idiots in Washington decided that the rich and powerful would naturally play fair. The selfishness of the "ME" generation wreaked havoc, the Gen Xer's don't give a damn and the Great generation is too old to do anything about it.

When we gave up our membership to the neighborhood watch group and concentrated solely on looking out for number one, we started losing our grip.

Enlightened, intelligent and responsible individuals, like Brooksley Born and Hyman Minsky tried to warn us. But they were ignored or shutdown.

And while those enraptured by the political carnival are busy pointing fingers (what is it they say about "...three pointing back"), and focus on constituent cash extraction rather than actual governing, the same conditions remain.

Okay, Nutshell

We stopped thinking about the big picture, we stopped being team players and we stopped using common sense. Blame whoever you want, but at some point we stopped caring, as a group.

P.S.

Do you realize that Americans actually sacrificed in order to help pay for WWII? Do you comprehend what the term "War Effort" meant to citizens of this nation in those days? Or are you too busy facebooking on your palm pilot?

See what I mean.

Inspired by Umair Haque's; "The Real Roots of the Crisis", Harvard Business Review - Feb. 24th, 2010