The Motley Fool Discussion Boards

Previous Page

Investment Analysis Clubs / Macro Economic Trends and Risks


Subject:  Big Deal Date:  3/28/2013  11:39 PM
Author:  RaptorD2 Number:  419159 of 489306

It can’t be just me.

Recent news stories from anywhere on Earth require a reader to have access to maps of a rotating list of geographic locations in the world. Cyprus. Luxemburg. Portugal. Spain. Pick up any newspaper, if you happen to be one of the minority of remaining subscribers. Otherwise, look at any news website, magazine or investing spam and we find more rehashing of similar crises that are increasingly dire and each “unique”. Unique” in circumstance, unique in geographical terms and unique in the solutions provided by the reigning Powers That Be.

But wait. Are they unique? All the banking crises around the globe … we often tend to think of them as limited, country-specific problems and indeed, some of the unsustainable situations that have arisen since 2008 were indeed exacerbated by actions taken by political leaders of various locals in addition to those taken by management at individual TBTF banks. No doubt about that. However, and I may be wrong, the lens I look through to view the world is telling me an even more hideous story. Thankfully I am not an economist and have no special expertise in economics, so there is a chance that my lens needs tuning or replacement. But for now, it’s the only lens I have to judge what’s really happening on planet Earth.

My first thought is that there are so many interesting questions arising out of these “crisis events” that one would have to be a fool to wonder why solutions, or rules, if you will, were not already in place—and publicized, mind you—long before they were needed. For example: Should the cost of a private and failing bank be born by the depositors, bond holders or should government take the hit and pass on the cost to all taxpayers? Or is a public bank just like any other business and should be allowed to file bankruptcy and go out of business in an orderly fashion like a giant retailer would? I am confident that most of us could make a relatively valid argument for any of these options or a mix of the options as the “correct” or “fair” solution. But that doesn’t answer the question of what will actually be done to alleviate any of the individual problems because our opinions matter squat to those in control of the levers. But even discussing and arguing for any of available choices still don’t come close to covering the scope of the problems I see while viewing them through my wide angle lens (which ironically is the counterpoint to a “macro” lens in optics, unlike economics.)

Another question. Did the housing crisis in the U.S. really cause all of the current worldwide crises? We all know that it started the ball rolling down the hill, but if that particular bubble never happened, would the world economic systems be anything like what any of us here, being of sound mind, would call truly healthy? Would it be resilient and stable? In other words, what if the problems aren’t only bank specific? What if they are not truly country-specific? What if they are systemic and ingrained to a system that is faulty? While we’re asking the questions, let’s ask another. (How dare we?) What if they are all due to a faulty model that is doomed to eventual failure? As mentioned above, I am not an economist but my (limited) knowledge of economic theory tells me a few simple things that have more than once caused me to debate with