an intuitive explanation of the current economic crisis

Financial infrastructure have grown in the past few years substantially in the US. By financial infrastructure I mean the tools finanical institutions have developed to govern money flows, to attract investors and their money. This was especially evident in the housing market.

So the infrastructure has grown so much that at some point it became obvious that there is not enough money around to put into it, so that the infrastructure keeps functioning (which means growing).

This explanatory model means at least two things. First, the bailout bill will not work, if no other measures are taken, because an additional $700 billion will provide for continuation of the same faulty practices, that lead to the crisis. Second, the short term solution lies in identifying the bad sectors of the economy and their quick and orderly default.

One would think, that it was precisely this that $700 billion was meant for. But I think, rather it is what it is called – a bailout pumping of cash into ineffective and failed businesses.

3 thoughts on “an intuitive explanation of the current economic crisis

  1. tehe tehe tehe tehe tehe tehe tehe tehe yeaaaaaaah
    great tehe tehe tehe tehe tehe tehe cough cough
    random thoughts to seriuos old men and
    women tehe tehe

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