The cause of the present financial crisis-not US subprime loans-it is unknown

The press and Governments worldwide, especially the US Government, has blamed the present financial crisis as originating from US sub prime housing loans and then "snowballing" into a bigger problem.

Just because two things are happening together doesn't mean that one is causing the other. There is no proof anywhere that the malaise in financial markets today was caused by the US sub-prime bets going bad (on part of investors and banks).

To attribute the cause to a liquidity problem doesn't say anything. Any financial crisis is a liquidity problem at heart, duh.

Nobody knows why the markets fell part this year; and more importantly, for the policy makers etc. around the world who are trying to "fix" this problem---you can't. Bailing out Bear Stearns seemed to have done it, then increasing credit to banks, then bailing out AIG, then selling Washington Mutual to Citibank...the list goes on. The end result is that the liquidity problem still continues---ergo---you aren't doing much at all to solve the problem.

They should all come out with hands up in the air one of these days and say 'WE HAVE NO CLUE WHY THE MARKETS ARE BEHAVING THE WAY THEY DO'.

A group of monkeys could get together to solve the present crisis-and it would have the same effect-none. This is no disrespect for my own species-but simply a fact that we don't know is a very good answer often times in our lives.

Long live Taleb.

Sanjay

1 comment:

  1. This Financial Crisis began a long time before America was “discovered”, long before the British Isles were settled, in fact so long ago that many of us have forgotten. It was when humanity first made the decision that Land could be considered personal property and belonged in the marketplace as a commodity when in fact Land is a necessary component of Life and therefore a Birthright. Food and materials for clothing and shelter all originate from Land. In fact Land is where the majority of wealth producing goods originate. Along with Oxygen and Water, Land is a necessary component of Life and therefore a Birthright of every human being. All “great” societies have met their demise due to the neglect of this simple fact. We can point our fingers at peripheral problems and solutions all we want but until we learn to honor the contract of Life and build our social structure upon that Sacred Foundation we will always reap dire consequences in the long run. Land is a Universal Birthright!

    There is a principle called Ockham's razor which is attributed to the 14th-century English logician and Franciscan friar, William of Ockham. It basically states that – "All other things being equal, the simplest solution is the best."

    The following are two simple ideas that effectively create the ideal social construct.

    Simple Idea #1

    1. Socialize ALL Land (True Socialism defined as the vesting of ownership of Land back in the community as a whole)

    2. Charge leases on ALL Land based on current market prices.

    3. Return 100% of the resulting revenue equally to every man, woman and child (no matter their financial status) in the form of a yearly Land Dividend check.

    4. Make the Universal Birthright of Land an Everlasting Standard in the education/understanding of every human being.

    This effectively makes the average piece of Land Free for every Living Soul and restores our Natural Birthright as well as coupling our social construct to the Principles of Life.

    Simple Idea #2

    1. Remove ALL FORMS of taxation

    2. Implement a Tax on ALL NEW goods based on the resources they contain and the resources they use in production and delivery (this can easily be implemented with the current barcode system used at the checkout)

    3. Use this system to encourage/discourage various resource usages (High tax on non-renewable/ecosystem damaging products and low/no tax on renewable/ecosystem enhancing products) and to encourage purchasing of local products.

    4. Use the resulting revenue to fund infrastructure expenses and the restoration of ecosystems.

    This effectively encourages the creation/use of longer lasting, high quality products as well as encouraging recycling and reuse of existing products while also establishing a compatible relationship with the ecosystem.


    Idea #2 effectively constrains the ravaging appetite of the capitalistic consumer society within the Boundaries of Sustainability while Idea #1 effectively encloses both Sustainability and capitalism within the Principles of Life.

    That's it! The path to True Democracy (rule by the people) – True Liberty (Freedom of expression) – True Socialism (Universal Birthright of Life). Simple and Effective


    Scott

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