Fundamental Reason for Current World Economic Turmoil

What is the fundamental reason for current world economic turmoil?  It is a quadrillion dollar question. Contrary to popular perception, the answer is not US housing crisis or exotic derivatives such as CMO’s and CDO’s or high oil prices or cheap dollar.  The fundamental reason is lack of trust. People don’t trust the banks with their hard earned money. Banks don’t trust people to lend money. Investors don’t trust  the CEO’s and CFO’s of public companies to invest in them . Business leaders don’t trust the political establishment and political leaders don’t trust private enterprises.Finally people don’t trust their elected officials and public institutions. It is a evil cycle: Classic chicken Egg problem.

So who is responsible for it? It is my view that everybody played a part in creating this mess. No one group is individually responsible for it.  As People, we didn’t do due diligence of our personal finances before buying an expensive home.Bankers didn’t do due diligence of risks associated with complex derivatives before hoarding them.Public institutions  didn’t do due diligence in monitoring wall street and private enterprises. Business leaders didn’t do due diligence of shareholders interest before awarding million dollar bonuses and back dated stock options to employees.

The direct analogous to financial crisis is silently happening in the internet world. Without understanding the risks associated with storing our private data in the servers of Google and Facebooks of the world , we are happily uploading our photos, documents and other intellectual assets  to these Web 2.0 providers. People need to perform due diligence and understand the risks before uploading thier data to web service providers. What if they shut down their business tomorrow? What happens to your data? Please for your sake don’t be naive or have a belief that Google or facebook won’t shut down thier services. They might if the services are not profitable enough for them. Click here to know more. You can  also check out the related article in Ars Technica. Codelathe’s soon to be unveiled software Tonido will allow the user to have absolute  control over thier data rather than conceding control to web Goliaths such as Google and Facebook.  If you are curious please sign up for the private beta release for early preview.


2 Responses

  1. MX says:

    “Fundamental Reason for Current World Economic Turmoil” – I believe this has been cause through rampant human population increase since the 1800’s. (We are more sucessful than rats)

    If you have a look at http://www.chrismartenson.com/crashcourse it takes you through the past, present and the future.

    Now how we got to the inflexion point, we went from an era of a man being able to produce a 20% surplus from the land, for what he needed to barter and exchange for his own use. This middle ages land use was a) sustainable through sunlight provided each year alone b) provided enough surplus to create slightly complex social network jobs for people who were not directly connected with the land. IE Kings. Queen, Lords of the Manor, Jesters, Musicians, Scholars etc

    Therefore I propose the fundamental reason based on Chris Martenson illustrations of our perceived world is OVER POPULATION!

    But we can’t talk about this is Western World Society’s because is you did so pubically the religious groups (the same type of twats who believed the world was flat) will hung draw and quarter you. My God’s better than your God, so I’m going to shag to prove it and create a bigger tribe, in order to be able to beat your tribe up and prove it. And it so it goes on, so another problem to postulate on is religion being the fundamental cause.

    As the Geeks are the new High Priests who make the information world spin, it’s interesting that they hold the keys to the new GOD of money, as the free market was someone’s sick wet dream. That an economic theory could replace many Western’s Worlds democratic systems.

    Well offering the free market to replace democracy is fatally flawed because:

    a) It assumes continued cheap energy in-finitum
    b) It assumes the market place is not corrupt

    If someone discovered cold fusion it a test tube, how the human race would just abuse cheap energy and accelerate our own extinction.

    “Free Markets” – dreamed up those economists who have never done a day’s honest work in their lives. For “if” they had, they would not use the term, if they were educated in the way that they saw the media is controlled by “third parties”, and discovered that the majority of so called “news” is re-hacked press releases and pre-approved by the CIA/MI6. They might just take a view that because of the negliable transparency in the trading market places today. The use of the term “Free Markets” is little more than someone’s idea of sick joke.

    Sorry it’s only reality as I perceive it…

    MX

  2. I dont think its a matter of trust. I think its down to the fact that people are borrowing too much money that they cannot pay back. You only have to look at the sub prime mortgages fiasco to see that. People who are bad risks should not be able to borrow money, its as simple as that. The banks have lost billions to bad payers.

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