Credit Crisis. The Short Explanation.

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A clear concise informed explanation of how the credit-crisis happened. And a simple series of conclusions about what to do next. from 2thinknow.

Transcript of Credit Crisis. The Short Explanation.

  • Credit Crisis. Its serious.
    • Theres a long explanation for the loss of value.
    • This is the short one.
  • But Werent we making money? Yes.
  • We had Economic Growth.
    • GDP, total goods & services. Production.
    • And, Consumption.
  • A Bigger Pie.
  • The Pie could grow by:
    • Increases in productivity & Innovation.
    • Or
  • Sin. Oops.
    • Pride.
    • Sloth.
    • Lust.
    • Greed.
    • Gluttony.
    • Wraith.
    • Envy.
  • Same old sins. Asset bubble. Debt binge. Wall Street. With no more suckers at the bottom of the pyramid
  • And with no exit strategy.
    • Oh, and like the Titanic, First Class survived.
  • As, we loaded up with debt.
    • Or if we didnt.
    • Our Friends & Family did.
    • Our Employer, too.
    • Our Banks, more!
    • Our Government, most.
    There were great expectations , you see.
  • First, Our Kids.
    • If you didnt borrow
    • Well, other parents could do more for their kids.
    • Debt or less for your kids.
    • Not a palatable choice.
    • So, GULP and, sign.
    • So, Debt
  • Competition.
    • If you didnt borrow, or buy shares of people who did, or invest, your income probably shrunk further.
    • Even your idiot cousin bought a really nice car.
    • So, yes, Debt.
  • And, Temptation.
    • So, ah, Debt
  • Bankers said.
    • Growth would never end.
    • This time it was different.
    • Not too hard, either.
  • Now, Regret.
    • It was different before.
    • In the 1920s.
    • Then came the 1930s .
  • We drank the Kool Aid
  • And now got less Pie.
    • Middle-class wealth has shrunk despite Growth.
    • And the minimum wage is not going anywhere.
    • So, who got more Pie?
  • Not workers. Jobs, offshore.
  • Lets ask thy neighbour.
    • Dumped products.
    • Unsafe conditions.
    • Slavery.
    • Pollution.
    • He got crust.
  • Money lenders in temples?
    • You can tell who society considers important by the height of buildings.
    • Mmm...
  • If only we had an ethical guide.
    • There was a book written about ethics once.
    • The Bible.
    • It underpins our laws.
    Greenspan said it was complex.
  • The Torah & Koran have something to say about ethics too.
  • Whats Next?
    • Well, we have to hand back all the ill-gotten gains of the last few years first.
    • And stock & property markets are doing that.
    • How much is given up will depend on future growth.
    • Yes, its right to be angry . Otherwise nothing will change.
  • But, dont Envy.
    • I shared an armrest.
    • On a European flight. With head honcho of a major consultancy.
    • He consulted to money lenders.
    • As did I. I talked about my ideas about innovation.
    • He snorted winners & losers. He meant I am a bigger winner than you.
    • You may have lost money.
    • But he lost something.
    • Something very valuable.
    • He was the most miserable single human I ever met.
    • A wrecked wretch.
    Well, at least hell be warm.
  • Economic policy is just a theory that hasnt failed. Yet. Or not too badly. Speaking of which, this is Milton Friedman. So, Milton. How do you feel now?
  • But even Economists agree. True Economic Growth is derived from productivity & innovation. They dont agree much.
    • Producing innovation.
    • That makes life better.
    Image from Lietuvos nacionalinis muziejus (National Museum of Lithuania)
  • Thats Local Innovation.
    • Jobs.
    • Arts.
    • Culture.
    • Community.
    • Its the only thing that works.
    • And the only thing that ever did.
  • Local Innovation. Local Economy. Local Jobs.
    • Thats the 2thinknow view.
    • 2thinknow predicted in 2007 the current economic crisis including the US September shock event, US recession, and the peak of the ASX stock market in Nov 2007. At the time the voices of greed were still talking up the boom. We used our new proprietary technique of nascent trend analysis to do so. And, good judgment. 2thinknow is a global innovation agency specialising in sharing good original ideas, and profiting from innovation & global trends. To read more about 2thinknow go to www.2thinknow.com
  • Christopher Hire.
    • The Author. Was a Consultant for. 3 banks . 2 investment banks . 1 ratings agency . 3 property developers. 341+ other organizations . He had worked on data in risk models, financial & analysis systems . Among other things . The author left data consulting . In April 2007 . He did this at great cost . Because the system is short-sighted . And unethical . Business can be more than that . So he set-up 2thinknow . And he is author of the Global Innovation Review . He applied his skills to things he believed in . Business models & analysis . To improve places where we live, work & play . Innovation Cities . Trends. Creative Companies . He is now happier & poorer . And lives in Melbourne, Australia . He wears a suit some days but enjoys not working for tossers.