MELTDOWN, Causes and Cures - Let's Prehend
Let's Prehend
A Manual of Human Ecology and Culture Design

MELTDOWN, Causes and Cures

A Brief History of the Crisis

The ingenuity and resources, nourished in our free society, resulted in the creation of a plethora of financial machinations that provided vast economic expansion and accumulation of wealth. For example, the housing inflation allowed a continuing influx of mortgage based money to enrich the system. Unfortunately, the housing bubble collapsed and houses began to revert to their `objective value'. [Chapter 7: ECONOMICS] This left the mortgage holders with no recourse but to foreclose, their money was depleted or just gone. But the mortgages had morphed into a complex of mortgage backed securities. The great wealth became `funny money', FM.

The financial community is at a loss to solve this problem. Their preferred solution is for the civilian elected government to bail out their funny money with real money. The financial community froze and stopped lending, since the rating machinery was corrupted. The money lenders then extorted the elected government to convert their funny money into real money. If we don't pay them off, they won't play marbles.

Creating more money would cause extreme inflation, temporarily delayed by the looming depression. The bond raters and money lenders are threatened with great losses, except for those that sold early.

Worse yet, the great wealth of our Flat World poured into these funny money investments because America was reputedly a secure and honorable last resort, thanks to Alexander Hamilton and others. Thousands of wealthy Americans got snookered. The wealthy individuals and institutions of the world got snookered. Even UC Berkeley lost fifty billion from its endowment.

The wealthy of the world will not let this go. America is not only shamed, but despised by the wealthy victims who got snookered.

After WWII, United States individuals and institutions owned about half of the world's capital. After half century of reconstruction and accumulation, U. S. still owned about a quarter of a much larger pie. In the recent decade, much of this capital has been squandered, leaving a pit of poverty. Enraged poor and exploited people usually succumb passively except for a bit of terrorism, but enraged rich people can be really dangerous. They may seem polite, but they despise us and our betrayal and will seek revenge for a long time to come. Chinese officials ask that we make good the debt.


United States is wealthy not because it is `productive' but because the world's wealth of resources, labor, pours in from productive investments, much of which has been squandered. Worse yet, much of the labor and resources still operating in U. S. produce nothing of value. The auto industry wants to continue making poor cars. The energy industry prefers `economic growth'. They may be increasing cogeneration and renewables, but also coal fired plants. The medical industry continues to squeeze most of life long medical expenses from the estates of the dying. The food industry ... .

Notice that a market or `capitalist' system goes for the money. The more things cost, the more money is made. A nickel's worth of corn sells for five dollars as corn flakes. Drug companies spend more on advertizing than on research and the research produces mostly redundant, useless, and harmful products. Houses cost ten time more than they should because of the elaborate and corrupt building codes. This system will come tumbling down as the influx of world wealth diminishes.

GINI, the measure of gross income inequality, is worse in U. S. than almost anywhere. Even Brazil is slowly decreasing the chasm between rich and poor. Russia, of course, changed from one of the flattest to one of the steepest income distribution curves since 1990, but we can expect the usual revolution from them. China's GINI went from steeper than US, to lower, because the collapse of the world economy leads to investing hugely to upgrade rural life.

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