I mentioned in my last post that I'd go on to explore the nature of the current global financial crisis and the part that the U.S. has in it:
- Nobel laureate economist Paul Krugman saw it coming. In his book, The Great Unraveling: losing our way in the new century (2003), drawing from insights of an earlier work, Irrational Exuberance (2000) by Yale University professor Robert Schiller, Krugman described how the U.S. financial market was surviving on a Ponzi Paradigm.
- World-renowned journalist Thomas Friedman picked up the same theme and compared the financial market and the American way of life to Bernard Madoff's ponzi scheme in these two articles in his New York Times column: "The Great Unraveling" (081216) and "The Inflection Is Near?" (090307) . Both articles stressed the need for Americans to change their unsustainable practices leading up to the financial crisis.
- Retired Harvard Business School professor, Shoshana Zuboff, went further. She called such practices in the financial market "Wall Street's Economic Crimes Against Humanity." (Business Week 090320)
- The "Madoff" in the System
- What transpired
- One Year after the crash
- OPM: Other People's Money
- IBG: I'll Be Gone
Recently, President Obama had some strong words against the "reckless behavior" of Wall Street. Nevertheless, it seemed quite apparent that persistence of irresponsible self-interests in the system might be too deep-rooted for him to bring about any of the real changes that are desperately needed.
If the above brief summary generally matches reality, what this means is that history is repeating itself. Astronomical amount of taxpayer money has been funneled into the federal bailout by the U.S. government. However, what this is doing might be not much more than containing a catastrophic global financial meltdown by creating yet another giant bubble that is large enough to cover the burst one; financed by borrowing heavily from the global financial market.
To quote Thomas Friedman above: "If that isn’t a pyramid scheme, what is?"