4fooey

October 8, 2008

Borrowed, Binged, Busted

Filed under: Economy, Politics/News — Tags: , , — 4fooey @ 10:03 pm

The scale of the rescue package for the UK financial system is unbelievable. The total package is said to be worth around £500 billion — this is a phenomenal amount of money by any measure. You can argue about the details of the deal, or you may have an opinion about whether or not it should happen, but we are told we need to do this now to save the economy — it’s as blunt as that. So how did we get here?

For too long, our whole society has been living beyond its means, not just in Britain, but across the world, mainly in the Western developed world. As a whole, we borrow too much, we over stretch our finances too far, we buy too much, we consume too much. Aside from the obvious excesses you see from some people, such as gas guzzling vehicles, extravagent lifestyles, luxury goods, etc, the whole way of life in the west, for more or less every individual, is based on the over consumption of resources and energy. To support this lifestyle, we have borrowed too much, both as individuals and governments. For too long we have binged on credit, on easy money, and binged on the trappings of our modern lifstyle. The financial crisis is not something abstract that is happening in the banks, behind closed doors, or on stock markets, it is the manifestation of our bankrupt and unsustainable western way of life. And now it is thoroughly busted. To cap this, the government solution is to borrow ever greater sums of money to bail-out the system (yeah we haven’t got the £500 billion) — piling debt upon debt — in the end we all pay for this.

Many people think this crisis will get a lot worse, but surely at some point things will get better. So how do we get out of this mess? We have to go back to basics. With a good measure of common sense, we will have to change our lifestyles, live on less, use technology and innovation to help us — we need to create things of real value. We need a system that is sustainable, that uses resources wisely, one that is built in the service of people, all people, and future generations. Fine words, but after this crisis, it could be done, if we have the will.

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3 Comments »

  1. I also think that people have an unhealthy preoccupation with owning things and its obvious corollary consumerism. We recognise the negative consequences of one or more problems and therefore the need to tackle them.
    To banish the negative consequences one needs to successfully identify the problem(s) and to understand their root(s). If those root(s) are a part of human nature, they are probably insuperable, if not, what is it about society that encourages this behaviour? It is likely the situation is a complex combination of the innate and the learned and so solutions would also be complex.
    I am also conscious that some people, maybe a sizable percentage, do not consider we have problems, that the current turmoil is temporary and perhaps even a necessary learning adjustment in an otherwise sound upward trajectory for humanity. Few would suggest that we roll back our ‘advances’, that there is anything noble in ignorance and the inability to control our biology and environment.
    What do you consider the problems that gave rise the current crisis and what are the roots of those problems?

    Comment by conceptualizer — October 10, 2008 @ 10:48 am

  2. Good points conceptualizer. You’re right that a lot of the behaviour we see is innate or part of being human. I guess that’s why we have laws to say what we must or must not do, and then a looser arrangement of ethics or morality — and there religion used to determine what people considered right or proper — all these combined laws and ethics are arrived at hopefully by consensus. This consensus needs to change, and in some cases it does — e.g. most people regard “gas guzzlers” to be unacceptable now, but it’s also the cost of fuel that has made them realise this. Often it’s a combination of factors that makes people change their behaviour — new laws, gentle persuasion, peer pressure, economic factors (they can no longer afford something), and so.

    We need the free market and a truly free society, and generally this system works and prospers, but we do need regulations and rules to curb our natural instincts — this is very obvious in the current financial crisis. We also need strong economies, and global cooperation, to fix issues like climate change. Hopefully we can sort the current crisis and get down to fixing the other global problems we face.

    Comment by 4fooey — October 10, 2008 @ 11:08 am

  3. The more I think about the current troubles and apparently ineffectual efforts to mitigate them, the more I am inclined to think that we are all at sea. Hopefully, decisions are being made based on the best advice from an array of the foremost experts in the field of economics. People who are highly educated, intelligent and experienced are all scrabbling for answers. This impresses upon me that we are more active as agents in this world than is wise for us. If we allow ourselves to act to the limits of our ability we are destined always to be in trouble. We are mistakenly optimistic about our capacity to understand our the consequences of our actions. If we were capable enough, then we should never experience any troubles.

    Comment by conceptualizer — October 13, 2008 @ 5:56 am


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