On the Financial Crisis

I’m not interested in adding to the hype and fear generated by the media coverage of our current economic turbulence. Having lived through the last three financial crises in New York, not far from Wall Street, I believe that this one like the others, will work itself out. What is, however, missing from the coverage is:

1. The problem is not a sub-prime mortgage crisis which can be addressed by the government buying up the entire lot of worthless mortgage backed securities. It is a debt crisis and the only way out is to reduce debt. That would be personal debt, corporate debt and national debt.

2. The Iraq war has done more to damage the national economy than worthless securitized debt.

Now the good news:

As Marcus Aurelius put it:

“The universe is change: our life is what our thoughts make it”

The events that we may view as disaster may be the greatest teacher to another. A man living on the border of China cherished his stallion above all else in his life. One day his horse escaped and was captured by the nomads across the border. Everyone tried to console him, but his father only said, “What makes you so sure this isn’t a blessing?” Some months later his stallion returned home bringing with him a mate. The man was overjoyed at his good fortune, but his father only said, “What makes you so sure this isn’t a disaster?” Riding his new horse one day he fell and broke his hip and was once more lost in despair. His father asked “What makes you so sure this isn’t a blessing?” Soon after, the nomads invaded the village and forced every able-bodied man into their army. The father and his lame son were spared this fate.

We may be in for some hard economic times … or not. Either way we have an opportunity. I spend my days in the world of technology; which is fine … when it works. Often, however it doesn’t work, not correctly anyway. Instead of lamenting the software defects, I tell the users that what we have is not a problem, its an opportunity.