I can't help but make an entry about the 'credit crunch'1 and the financial, and maybe social catastrophe it's very quickly accelerated into. It's almost certainly that for the US, and probably going to be that for of the western world. I'm really intrigued as to how it's playing out in Australia's MSM which is really hard to gauge from afar.
I've been quietly observing - taking in the arguments as they filter through to me via different types of media - and thinking about this, trying to decide what I think the best approach for a solution is. While I'm generally in favour of letting the market sort out its own mess, it's clear there are reasons why we might not want to let that happen here; good reasons, which are artifacts of how the system has operated up to this point.
There have been many good articles in the online media2 with insightful and intelligent comment on the situation, but I believe Bitter Harvest by Ingolf at Club Troppo deserves to be highlighted. Aside from it being an excellent piece of opinion writing, it lines up very well with my still formative opinion on the topic.
My natural inclination is also to trust the market to sort out most problems. Indeed, had they been allowed to do so over recent decades, we wouldn’t be in this mess. As Shostak rightly says, it was a persistent unwillingness to suffer short term and necessary pain (in other words, to allow creative destruction to do its job) that over time utterly distorted risk perceptions and so enabled things to reach such a state.
These are hard questions which even very smart people get wrong3. While popular opinion about what should be done must necessarily play a part in devising a strategy, hopefully any optimum solution that might be devised isn't compromised by popular opinion of the unqualified4 masses. Yeah right.
- I'm betting that 'credit crunch' will be 2008's most used new term in the media. Surely there's no phrase more used world wide. [↩]
- Blogs and mainstream media obviously both included. [↩]
- Are there even correct answers? Probably not, but there sure are better answers and worse answers. [↩]
- Myself included - obviously. [↩]