A helpful article

[blehmeh05]

If you're like me and interested/concerned about all the financial bailout news that's been dominating the headlines, but having trouble understanding just why things are so dire (and feeling less than trusting of politicians who want us to take their word on it), this article from the Herald Tribune may shed some light. One of the more cogent,

Comments

[scribblemoose]

That is a very helpful article, and applies to the UK too, on a lesser scale, so thanks for the link. I'll pass it on to our Economics teacher, in fact, because he's been having trouble getting his students to understand this!

However, there's one thing it misses out, which is the main reason behind the loss of confidence by creditors - the fact that as well as relying on credit, our global economy depends on the principle of unlimited economic growth. As this is not sustainable, because global resources are of course finite, as soon as a key resource becomes scarce through overuse or lack of control, prices rise sharply and cracks appear. One word: oil.

Until we learn that our businesses must be based on sustainable resources if they are to be stable - and there's plenty out there, if financial and political institutions would only put some resources and faith into helping people develop them - we will keep veering from boom to bust in ever diminishing cycles, with all the poverty and hardship that causes. (There may not be shanty towns expected in the US any time soon, but that's largely because the global economy places poverty in specific countries rather than within our wealthier ones... the Third World is one big shanty town, really.)

And there endeth the political rant. ^_^;

[blehmeh05]

However, there's one thing it misses out, which is the main reason behind the loss of confidence by creditors - the fact that as well as relying on credit, our global economy depends on the principle of unlimited economic growth.

*nods* Whenever I hear people championing the 'free market' I always wonder if they realize all the economic models they cling to are based on multiple assumptions like this one that just don't hold up under real-world circumstances. I'm a big believer in using simplifications and assumptions as tools to promote progress in research, but I wish more people understood that the purity of free market capitalism only exists on paper.