bail

Like so many, I'm following the bailout closely. As a management major in school, I took more than my share of economics courses (known as "the dismal science" for a reason). I've also met at least one of the major players in attempts to resolve the current crisis, and know members of his immediate family quite well, so there's a bit of personal interest.

Obviously, failure to find a resolution will have profound consequences. I have little sympathy for the Wall Street players, although there's plenty of blame to go around they certainly need to shoulder a major portion as the front-line participants. But the pain won't stop on Wall Street. It will also hurt lots of small investors, lots of people with 401(k) plans, and indirectly... in job losses and inability to get credit... a lot of people who had little or no personal involvement in the fiasco.

And yet, the unthinkable occurred to me the other day, and I can't get it out of my head: Maybe, in a perverse sort of way, a collapse of the financial system could be the best long-term thing that could happen to our economy. Maybe that's the only thing that will break us of our materialistic addiction, our binge of buying things we don't really need with money we don't really have.

I have one additional concern, one that I so far haven't seen much discussion of. As banks and investment firms fall like dominoes and some are acquired by larger banks, a significant consolidation of the financial industry is taking place. Banks like Wachovia (which got in trouble partly through acquisitions of its own) are now in turn being swallowed by titans like Citibank. Yet acquisitions and the dealings of mega-firms contributed to the crisis. Are we simply reducing competition and setting up at a minimum a future of distant dealings by huge impersonal and out-of-touch corporations with huge political clout, and which too often outsource jobs overseas? Or at worst, are we setting up the next crisis? In finance class, they taught us to diversify to reduce risk. Yet here we are, consolidating, creating oligarchies.

Maybe we'll draw back from the precipice this time. Yet it's important to remember that our current economic system is essentially a 150-year old experiment, that in it's present form dates back only to the post-WWII years. Even within the relatively short span of recorded human history, it's little more than a blip in time. One can't help but wonder how long a system predicated on never-ending economic growth can be sustainable. The cliff is out there someplace, we just don't know how far in the distance it lies; and we can't see much in the dismal darkness.