The Great Moderation Did It - Road to the Middle Class

Ever since the nail-biting recession of 1980-82 the world economy has been remarkably crisis free. There have been all kinds of things thrown at it: “the Savings and Loan Crisis, the ‘Asian Flu,ā€¯’ the Russian default on their debt, the bursting of the dot com bubble and even the September 11th attacks.” But nothing was disruptive enough to cause a major recession. The global economy just sailed through.

Well maybe that golden age is over. People got used to moderation and in response took on bigger risks. We’ve all cashed in by taking out bigger mortgages and the folks of Wall Street have indulged in a veritable orgy of debt and leverage.

Not to be outdone the politicians geared up Fannie Mae and Freddie Mac to loan money on sub-prime mortgages in what you might call the granddaddy of all bigger risks.

Well, now it looks like the chickens are coming home to roost, with the Paulson bailout unable to arrest the downdraft in the stock market. Only, of course, the chickens are going to be roosting on you and me, not on the politicians and bankers that took the risks and awarded themselves the bonuses.

I suppose it’s too much to ask, but when we get out on the other side of this, could we try to reduce the amount of debt in the economy and try a little equity? It seems to me that it’s more neighborly, as it shares the gains and the losses, rather than grabbing all the wins for me and socializing all the losses for thee, as occurs under the current system.

Sphere: Related Content |

Christopher Chantrill blogs at www.roadtothemiddleclass.com. His Road to the Middle Class is forthcoming.

TAGS

Faith & Purpose

“When we began first to preach these things, the people appeared as awakened from the sleep of ages—they seemed to see for the first time that they were responsible beings...”
Finke, Stark, The Churching of America, 1776-1990

Mutual Aid

In 1911... at least nine million of the 12 million covered by national insurance were already members of voluntary sick pay schemes. A similar proportion were also eligible for medical care.
Green, Reinventing Civil Society

Education

“We have met with families in which for weeks together, not an article of sustenance but potatoes had been used; yet for every child the hard-earned sum was provided to send them to school.”
E. G. West, Education and the State

Living Under Law

Law being too tenuous to rely upon in [Ulster and the Scottish borderlands], people developed patterns of settling differences by personal fighting and family feuds.
Thomas Sowell, Conquests and Cultures

German Philosophy

The primary thing to keep in mind about German and Russian thought since 1800 is that it takes for granted that the Cartesian, Lockean or Humean scientific and philosophical conception of man and nature... has been shown by indisputable evidence to be inadequate.
F.S.C. Northrop, The Meeting of East and West

Knowledge

Inquiry does not start unless there is a problem... It is the problem and its characteristics revealed by analysis which guides one first to the relevant facts and then, once the relevant facts are known, to the relevant hypotheses.
F.S.C. Northrop, The Logic of the Sciences and the Humanities

Chappies

“But I saw a man yesterday who knows a fellow who had it from a chappie that said that Urquhart had been dipping himself a bit recklessly off the deep end.” —Freddy Arbuthnot
Dorothy L. Sayers, Strong Poison

Democratic Capitalism

I mean three systems in one: a predominantly market economy; a polity respectful of the rights of the individual to life, liberty, and the pursuit of happiness; and a system of cultural institutions moved by ideals of liberty and justice for all. In short, three dynamic and converging systems functioning as one: a democratic polity, an economy based on markets and incentives, and a moral-cultural system which is plural and, in the largest sense, liberal.
Michael Novak, The Spirit of Democratic Capitalism

Action

The incentive that impels a man to act is always some uneasiness... But to make a man act [he must have] the expectation that purposeful behavior has the power to remove or at least to alleviate the felt uneasiness.
Ludwig von Mises, Human Action

Churches

[In the] higher Christian churches… they saunter through the liturgy like Mohawks along a string of scaffolding who have long since forgotten their danger. If God were to blast such a service to bits, the congregation would be, I believe, genuinely shocked. But in the low churches you expect it every minute.
Annie Dillard, Holy the Firm

Conversion

“When we received Christ,” Phil added, “all of a sudden we now had a rule book to go by, and when we had problems the preacher was right there to give us the answers.”
James M. Ault, Jr., Spirit and Flesh

Living Law

The recognition and integration of extralegal property rights [in the Homestead Act] was a key element in the United States becoming the most important market economy and producer of capital in the world.
Hernando de Soto, The Mystery of Capital

mysql close 0