Lessons from India

Before getting into the main post, a set of quotes from thinkers across the political spectrum (according to them):

First

"A new revolution is possible only in consequence of a new crisis” Karl Marx

Then

"Only a crisis, actual or perceived, produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable.” Milton Friedman

And finally

"You never want a serious crisis to go to waste." Rahm Emanuel

So with Rahm Emanuel, along with most every other political figure around the world, declaring the need for intense government action, the words have been flying in print, on air, and of course on the Internet as to exactly what those actions should be. There are those who are convinced that this crisis was convinced by deregulation, others that are equally convinced the cause to be over-regulation and government intervention, and others that don't really care as long as they can use this opportunity to punch their meal ticket, be that in the form of government contracts, bailouts, handouts, or social services.

Personally, I see it as trying to solve an equation with 100 variables, which is to say, nearly impossible. Government overstepped in some areas (Fannie, Freddie, CRA, Fed Reserve), and came up far short in other areas (lowering reserve requirements, voluntary regulations, muddy accounting rules). This of course caused problems, but none that weren't exacerbated by the modern white-collar pirates known as banking and finance executives. These "greed is good" laissez faire capitalists sowed what they planted. And the average citizen, as a cog in the great consumption based society, with a negative savings rate, addicted to easy credit and lured by nonsensical mortgage products, sang "Laissez le bon temps roulle"and partied away. Except the party wasn't supposed to end. But when someone decided that maybe $310,000 for a 828 square foot house in Compton is not the best long term investment, especially when the median income for the area hovers at $31,819, things got messy, and fast.

So all that to say that whether any one ideology, party, group, or institution really caused the present crisis, someone must be blamed, so the war of words rages on.

So who is worth listening to? I found myself largely in agreement with Indian economist Sanjeev Sabhlok in his recent blog entry, Unbridled Capitalism?

I have to get some sleep right now, but will share my thoughts on this article tomorrow. Good night.