In 2005 both Japan and Germany were struggling with this same situation we are in now. Recently a couple of people asked me to talk about the economy and I have been thinking and writing little snippets here and there. I was very aware of the situation in Japan mostly because I get some Japan news when I am reading about anime. I am a little more tuned to Japan than Germany. Politically I really don’t think either did the right thing when it came to their failing economies that started to show signs of trouble way before the U.S. did.
Listening to Obama’s speech last night my mind kept on going back to why is banks giving out credit so necessary for the economy? What about private investment? What about social lending?
Obama seemed to be pretty harsh towards Wall Street, but still believes that banks should survive.
Whether we like it or not, the government will end up having a huge stake in our banking system. Their failure to see the big picture and need to make money rather than look at long term goals made them in my eyes obsolete. I am not sure if the right solution is to keep them alive. I honestly think that our economic system is in need of a total makeover.
When I lived in Colombia I remember that lending was mostly done through credit unions. Credit cards simply did not exist to the extent they did here in the U.S. I learned all about credit here in the United States and frankly the model sucks quite a bit. It makes no sense to me that I cannot get a comparable rate on my savings as I get on my borrowing. That is why I am leaning more and more towards the social lending model these days rather than using a system that all that has done for me is charge me tons of extra fees. Oh yea, I think banks have cost me close to thousands in fees, some of it due to my youth check floating bonanza, but mostly to a mistake in their system a few years back that created a domino effect on my account. It taught me that living paycheck to paycheck was a huge mistake, and even though it took a lot more than that I have finally gotten back to having a savings account with some cushion.
If the banking system is the blood of capitalism, it certainly has leukemia. I look at capitalism and democracy as two sides of a scale, and right now democracy is starting to really tip things to one side. Democracy is supposed to save us from the injustices of capitalism, but for years it did just the opposite. Capitalism had free reign and it got us into this mess. Now a lot of people think that the solution is to let capitalism take its course and let business fail… but at what cost? who will end up losing the most? the rich already got richer, the poor are the ones unemployed and without millions in bonuses in the bank. Sure the super rich might have lost a lot in the stock market, but when the money was funneled out of wall street it was CEOs that were getting millions in bonuses. When one of them gets fired, they still have their financial future assured. Those people will still be able to send their kids to college and will never come close to starving. Their biggest sacrifice might be that they have to travel coach rather than on their private plane now.
I am very watchful of what is happening now, and still believe in democracy, capitalism truly not as much as I used to. I always go back to the thought that a hungry worker is not a good worker. I hope that what Obama says last night is going to happen and more jobs are going to be created because of the stimulus package. However, I think as a country we have a responsibility, and it is not to spend money, but to spend money wisely in the coming years.