At Last, The Revolution

Good news, bad news.

The good news is that the revolution many of us thought possible -- back in the grand old power-to-the-people days of the Sixties -- has arrived.

The bad news is that capitalism is crashing of its own weight: too much greed, too much technically driven complexity to be managed or regulated. Bernie Madoff's astonishing lack of integrity in bilking millions of people is the epitome of incentive capitalism, a symbol of all that can go wrong with misplaced trust.

Because of bureaucratic mismanagement by the large banks of the notes (IOUs) placed in securitization trusts, bankruptcy judges are finding that institutions claiming to hold the notes that support specific mortgages often cannot prove their ownership. (New York Times, March 1, 2009: "Guess What Got Lost In The Pool?") In a rush to generate profit, the paperwork wasn't completed. "Congratulations, Mr. Hernandez! Hold up on that foreclosure! You don't have to move out. We've, uh, misfiled the documents." The cost of this particular mismanagement cannot yet be measured.

The sound you hear, as the Dow Jones spirals south, is a very large financial infrastructure being sucked down by years of rapacious mismanagement. And we're taking down the global economy with us. Barack Obama is inheriting this mess. Tom Friedman details the depth of his new problems in the Times: Obama's Ball and Chain.

The pain of this evolution will be deep and wide. A dear old friend, now retired after 35 years working for one of the largest American communications companies, has lost all of his 401k nest egg. His savings are simply gone. He is representative of millions of people who are learning that in this interwoven global economy, their trust in the financial services industries has been misplaced. Resurrecting the banks, to anything resembling their former selves, is simply not possible. The reasons were spelled out by Tyler Cowen, again in the Times, a few days ago: Three Rocky Roads To a Bank Rescue.

And so here we sit, gazing into the abyss. But let's look at the possibilities. Let us characterize it this way: we the people of this imperfect, experimental union are evolving. What we are seeing is not a recession or a depression. Call it instead a stumble into uncertainty with a fresh awareness that we are a single planetary entity; that we must design a way -- and systems and processes -- to coexist on this delicately balanced ecosystem without seizing our piece of the pie at the expense of some other guy's; that we are in fact our brothers' keepers. Denial of this fact denies our most fundamental humanity. 

Look carefully at the very large economic picture, and learn all you can about it. Someone will have to rebuild on the gutted foundation of what is collapsing rapidly. We cannot go back to the way it was. We can only prepare to rebuild a sane, humane -- and inclusive -- foundation for the coming generations. Imagine it.