Countless theories about the economic crisis were aired last week in Davos during the World Economic Forum. But many of the voices heard were the same ones who ignored (or even helped create) the global meltdown that we all face today.
The Huffington Post asked readers to share their views on what caused the economic collapse and how to set things right. Hundreds of people sent in their opinions and below are a handful of our favorites. Thank you to everyone who participated.
CAUSE: Swelling of non-Bank "financial assets" completely outside the monetary controls of "fractional reserve deposit theory" managed by Central Banks. Thus, a world economy of $40-$50 trillion ballooned into an unsustainable $400-$500 trillion in uncollateralized "price/earnings" book value assets. - James Dickson, Santa Rosa, CA
SOLUTION: Give micro-grants to small businesses with good ideas. They know how to create jobs. Make them show receipts to make sure they are accountable. This trickle down approach isn't working. How much money is the government going to spend per job they want to create? Let's cut out the middleman here. I'm still in favor of the green jobs plan. Energy issues cannot be addressed with just small businesses. I also want to see the data that indicates tax cuts will create jobs, until then I am skeptical. -David Cohen, Brooklyn, NY
CAUSE: I think greed and a cultural of entitlement has trickled down in our society that has unearthed this vision of "capitalism and materialism" at all cost. This could have been avoided with oversight and regulatory practices, but it appears that greed was the victor on all fronts. I told friends and colleagues we were headed to a depression 3 years ago. And my indicator was that teens in the NYC area could no longer get jobs at places like McDonald's. Sadly, the black community is where the recessions begin, but most think, we'll it's not me so "I" don't have to worry. Well, we're all in this. - Saundra, New York, NY
SOLUTION: Create sustainable currencies that are backed by ecosystem services. I propose the currency be based on a common carbon unit (making it fungible) plus added values of: biodiversity, water, soil, and community development. Payments for ecosystem services would provide capital to depressed rural areas, help pay for national, state and local parks, and provide seigniorage to the government. -Jim Crisp, Shutesbury, MA
CAUSE: Our current operating system (Capitalism 2.0) gives too much power to profit-maximizing corporations that devour our commons and distribute most of their profit to a sliver of the population. And government--which in theory should defend our commons--is all too often a tool of those very corporations. -Peter Barnes, Point Reyes Station, CA
SOLUTION: Capitalism 3.0 would protect the commons while preserving the many strengths of capitalism as we know it. Its major innovation is the commons trust--a market-based entity with the power to limit use of scarce commons, charge rent, and pay dividends to everyone. Capitalism 3.0 points the way to a future in which we can retain capitalism's virtues while mitigating its vices. -Peter Barnes
CAUSE: A major cause, and unmentioned relative to other leading causes, was the rapid and random amalgamation of global economies. The merging of the German economies in the post Soviet Era clearly indicate the difficulty and expense of bringing together what were previously separate systems. This was (and continues to be) an enormous and expensive burden in spite of the common culture, highly trained industrial skills and hard work ethic. It is simply absurd to think that unregulated market dynamics can randomly handle the much larger merger inherent in the recent explosion of international trade. In our current situation this laissez-faire approach resulted in the world's largest economy entering into 3 decades of deficit spending as it shed the wherewithal to produce the goods and services it was consuming. Likewise, the world's fastest growing economy developed an enormous industrial base to produce goods and services that its own population (on average) does not use and can not afford. No rational analysis would indicate these models are stable. But public discourse consistently praises this open market process. The reason for the obfuscation was and is the enormous profits from what is basically an elaborate international Ponzi scheme. -Mark Selikson, Radnor, PA
SOLUTION: If the problem is mortgages, then that's where the solution resides. Instead of giving money to banks, which aren't loaning it, why not give it to mortgage holders and credit card holders in the form of cheap money (govt. subsidized mortgages at 4% 30 year fixed and credit card debt also subsidized down to 4%). If people know they can afford their home, if they are not being gauged to death by 12-30% credit card loans, then they will start spending money again. Hit the reset button, not on the banks, who have made all the money in the last decade, but on the consumer, who will then go out and spend money again. This is the only way to get the economy going from the bottom up, as well as keep people in their homes. Giving money without oversight to the very institutions who created/enabled the mess, is like giving chickens to the fox. Time to help the little guy who just needs a breather and he will open his wallet again. This will help all the companies downstream. -Arthur, Santa Monica, CA
CAUSE: When private companies cannot fail no matter what they do because the government will back their failures, they will make really stupid decisions. Freddie Mac and Fannie Mae had government backed loans so they made poor decisions with their lending practices with the laudable goal of increasing home ownership. However, the problem was that they lent to people who could never pay it back. Private companies, knowing the mortgages were backed by the government, repackaged the mortgages to sell. Then when the mortgages defaulted, everyone came to the taxpayers to bail out the loans. If the mortgages weren't backed, they never would have been made or repackaged. -Lee Doren, Chicago, IL
SOLUTION: Return, as President Obama is trying to do, to Keynesian economics -- strategies that influence cash-strapped, lower-income earners to spend money and thus stimulate demand. This translates into lowering the taxes of lower-income earners, and enacting programs that will create jobs. It's one thing to bump up by $200.00 the income of Steven Forbes. I would wager he would not be lining up at Wal-Mart any time soon. Put that money into the hands of a single mother, and she'll likely spend it faster than I can say "Rumpelstilskin." Further, Obama's economy "peeps" need to sit down like Dave, in the film of the same name, and slash everything from the budget that is not absolutely essential right now. This is not to say that studying the eyelashes of a tse tse fly is not important; just that it lacks priority in a time of economic crisis. -Beth Yates Hunter, Chicago
CAUSE: "Greed is good." So spoke Gordon Gecko, and America liked what it heard. Count the number of luxury cars you see on the road today and divide it by the number of people who can actually afford heated leather seats, and it won't take long to figure out how this happened. America has become a country of entitlement. And it is ironic that the Republican Party, the anti-welfare zealots, have promoted that entitlement through their encouragement of banks to loan, loan, loan and consumers to spend like drunken sailors. Bush's first answer to the economic crisis? "Go out and go shopping." Hey, why not? It's the land of milk and honey, baby, and nobody deserves more shiny new stuff than you do! The American people, along with their duly elected officials, have brought this crisis upon themselves. And even an inside trader like Gecko won't weasel out of this one. -Lee Gipson, Decatur, GA
SOLUTION: As millions get laid off, lose their homes and their college educations, and make the switch from steak to chicken, Americans will begin to learn their lessons the hard way. In other words, the crisis itself is the medicine this country needs to remind us that in the end, nothing comes easy. Bad banks, trillion-dollar bailouts and all the other hocus-pocus will do nothing to stem the tide until the American people wake up and sell their Hummers. At the risk of beating a dead phrase, this crisis will be solved on Main Street, not Wall Street. "When man looks down into the void, and sees nothing looking back, that's when he finds his true character." -Lee Gipson, Decatur, GA
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