Ok, so everyone and his aunt is going on about the financial meltdown, and the huge crisis and the troubled financial sector, so I thought I will share my thoughts too – not that they will help to save the world, but why not.
So, I got a very definite opinion on the root of the whole mess, and it was a really interesting thing that I found my thoughts echoed in a Terry Pratchett book from 1999 – well, actually from 2002, beause it’s the 2nd Edition of The Science of the Discworld, but that’s just a small detail.
A difficult but stubborn feature of human thinking is involved in all this: it’s known as reifying: making real. Imagining that because we have a word for something, then there must exist a ‘thing’that corresponds to the word. What about ‘bravery’or ‘cowardice’? Or ‘tunnel’? Indeed, what about ‘hole’?
What does it have to do with the current mess of the financial world? Well, skip down a few lines.
‘Debt’and ‘overdraft’are very familiar privatives, and the thinkig problems they cause are quite difficult. After all, your overdraft pays your bank manager’s salary, doesn’t it? So how can it fail to be real? Today’s derivatives market buys and sells debts and promises as if they were real – and it reifies them as words and numbers on pieces of paper, or digits in a computer’s memory. The more you think about it, the more amazing the everyday world of human beings becomes: most of it doesn’t actually exist at all.
The problem with “as if they were real” and “doesn’t actually exist” is tha when you actually have to pay, and all you have is nothing, then it gets difficult. The whole market is based on the assumption that no real money will have to be paid, it’s a huge “let’s pretend” and “make believe” game for adults – something like AD&D where you can win and lose a dragon’s hoard of treasure overnight. On paper.
The world ran out of actual money, on paper we have trillions, but that’s only because the same dollar/forint/gulden is showing up in several places as debt/promise/insurance/security/coverage multiplied and predicted, and if you trace back a million dollar to the actually existing thing in the real world you end up with a hut 20 miles from Kairo with a real value of 30 dollars.
Ok, that may be a bit extreme, but you get what I mean.
Rich people are literally gambling with our livelihoods. I think it's obscene. Hopefully more ordinary people will start to see through the con and find out more about how this happens.
I agree partly sefp, only thing is that it's not only the rich people. Not so rich people suck it up all too, on another level.
We are just as guilty with our mindless spending – just 18 easy installment of $20, and you can have this brand new ergono-classical gadget. Familiar?
And if you read the news it's not really the rich that got out better, it's the management who jumped ship.
Lehman CEO get 241 million if fails.
Modern society built a broken system and now there is a mess.
“Buying things. Buying things. Buying things we don't need with money we don't have”.
Roland, very astute observations! You hit the nail on the head. We live in a world of assumptions and what if's. It is not surprising that a book first written nearly a decade ago aptly describes our present situation. Nothing is truly new. I really enjoyed this post and the humor wrapped in truth. :-)