Financial Tsunami – No Coincidence

I remember clearly a couple of years ago, driving my car and hearing a short news items along the following lines: “an strong earthquake was felt in the Indian Ocean.  Some casualties have been reported”.  In retrospect, I remember clearly that the message along with the tone communicated a small, almost negligible seismic event.  The next news cast already reported of a “few dozen casualties”.  To make a long story short, it took weeks before the full magnitude of the event, including the quarter million dead, completely destroyed communities, diseases and economic disaster, was clear.  A very interesting place to follow the development of the crisis as presented in the news media can be found here.

A few months ago, some American banks reported a sub-prime mortgage problem.  Many dismissed it as a local event.  Bank managers, including the manager of the Lehman Brothers, Bear Stearns and others interviewed extensively, showing confidence in their organizations.  Weeks, sometimes days, and even hours later, organizations went under.  It seems to me that the magnitude of this economic downturn is not yet realized, and most certainly, its end is not yet known.  A very interesting place to follow the history of this crisis, including its legislative roots, can be found here.

But last night, watching some trash-TV promo, on the Israeli infamous Channel 2, I was enlightened.  I suddenly understood the connection and the relationships between the different elements which caused this economic disaster.  One word: Greed.  I wish there were ways to scream the word, or color it is a way that would register better with the reader.  Just saying it, or writing it, in five plain letters does not do justice to the level of uncontrollable appetite for money, and more money, and bigger cars, and fancier watches, and unnecessary gadgets, in short conspicuous consumption, amazing consumerism, driving entire economies on the ability of its people to consume things they don’t need, paying for it with money they don’t have.  The ability of people to strongly believe that the future is now.  That the continued existence of themselves and their descendants is unimportant, that savings is a bad word.  Something lead those people to believe that if they could sell an arm or a leg, and take the money to the mall to buy another pair of shoes from some brand name, which was manufacturing the shoes in some remote country by poor and staring children – is a good thing, and that it will drive everyone to prosperity.  Well, a brand named pair of shoes is not particularly attractive when one of your feet is mortgaged to finance it.  A Rolex does nothing to your social stature if your left arm is at the bank.

Destructive capitalism is driving economies, people, families and countries to starvation now.  Tycoons are no longer.  Or they are sufficiently crippled to present some humility to media interviews, if they interview at all, that is.  They are caught in a very dangerous downturn spiral.  If they interview and sound worried, the stock of the companies they represent go down the next day.  If they don’t interview, investors (what the hell is an investor?  Someone who buys a stock at 9:30 and sells it at 9:45 for a 2 cents per share profit?  Someone who gambles on the demise of a company and borrows stock to sell in the hopes that the stock will crash and he or she will be able to buy it at a lower price and live of the margin?) get nervous and sell.  If he interviews and looks smog, the stock goes down as it’s interpreted as an attempt to present confidence based on absolutely nothing.  It’s a lose-lose situation.

Anyhow, how do the two TV people, with all the right brand name clothes and gadgets, with the hair jell and the D&G glasses, deliver an explanation for the financial crisis (right, like the word crisis really represents this outstanding loss of wealth, jobs, and confidence).  This is how the conspiracy works:

A fully commercialized TV station recruits a couple of good for nothing media characters.  They are popular with the crowds.  In fact, they are idolized by the crowds.  They come up with some “reality” show – a nice name for a place for ordinary people to humiliate themselves for money (Moment of Truth, American Idol, Fear Factor to name a few, but the list is long and ugly).  This junk actually generates viewing ratings.  The rating is the new God of the twenty first century.  Businesses buy minutes or fractions of minutes to advertise whatever junk they want to sell.  Usually junk that you either don’t need, or can’t afford.  People watch the shows (very annoying experience as I can tell from the few times I did watch.  Five minutes of program for every three minutes of commercials), and race to the nearest shopping mall to buy the advertised junk.  When they get to the point that money isn’t enough anymore, they use credit.  When credit runs out, they use home equity, education funds, savings account, pawn shops, body organs, so they can buy the junk sponsored by the two celebrity clowns.

Is it really that hard to understand how an entire society finds itself completely and thoroughly broke?  Buying a house one can’t afford, with money that apparently and in retrospect, the bank couldn’t afford to give, ant a completely unreal price isn’t a good practice.  And hear this: it must lead to criminal activities.  How so?  Simple.  In yesterday’s news the following story was on the headlines.  A couple of businessmen bought land in a major development area in the US.  They brought in estimators who estimated the land to be worth almost two billion dollars.  Based on this estimate, they took a loan from the bank for over one billion dollars, putting the land down as collateral.  It happens so, that a third, independent valuation of the land found that the land was worth a fraction of the original estimate.  Less than half.  Voices are now heard that a criminal investigation should be launched.  All I can say about it, is an extremely sarcastic comment: government investment in police could provide employment for all the unemployed.  And accomplish some justice in the process as well.

Bottom line.  Consuming with no limits is indeed driving the economy.  To complete destruction.  We seem to have lost our values.  Lets reintroduce some values to our societies.  First and foremost: charity.  Not of the glamorous kind, but of the small and humane kind.  Help people directly.  People who lost their ability to provide for the families.  Go to your local town hall and ask for a family known to them to be in trouble.  And give, if you can.  Consume with respect to yourself, to your community, to your abilities, to global interests.  And don’t listen to shelled celebrities when they send you to the shopping malls to buy stuff you don’t need.  Appreciate people as the persons they are and not as the hanger they serve for brand names.  Be respectful to education, to family values.  Idolize nothing.  Doubt everything.  Trust your good judgment.

It’s just before Christmas.  People will try to tell you that the economy will go even worse if people don’t shop.  Let me tell you a little secret.  They said it last year too.  And the year before.  Societies should never be driven on how much they consume, but on how much they produce.  And this is the biggest lesson I have learned from this crisis.  A society that gives up its entire production and manufacturing capabilities, and is dependant only on consumerism, is in a much deeper problem than it thinks it is.