bailout

If you look around you can see what happens when greed festers. Consumption without restraint maybe fun for a while, but inevitably the time comes to pay the piper. In a free market economy that means a prolonged recession or even a depression. Recessions are much like storms. Most of them are easy to weather, but every once in a while you hit the perfect storm. One that leaves a trail of casualties behind. There is a high likelihood that we hit another perfect storm. Some have argued we are in a situation similar to that of the early 1930's.

The remedy for such situations is called government bailouts. This is the part the less regulation-less government crowd does not want to talk about. These guys hate the government. They like to be left alone so they can fully indulge in their endless greed. They don't want anyone to spoil the party with planning and regulation. Planning and regulation prevent them from getting scandalously rich. But when the bubble burst, they are the first to call for government help. Suddenly, the evil government turns to a saving angel. When trouble hits, the tax payer is the one footing the bill. And the really rich have already made sure they will not be the ones paying taxes.

In many ways the financial system is mimicking the real world. There are many analogies between financial systems and natural evolution. And there is something we can learn from observing this credit crisis. Absence of restraint and regulations leads to fantastic growth but also to premature death. While the bubble grows, nobody can convinced that the party will end. But it is obvious things cannot keep going the way they are. Yet the skeptics are dismissed as out of touch, old-fashioned, luddites, and what have you. And then the bubble bursts.

Unfortunately, once this happens on a global scale, there will be nobody to bail us out. So go ahead and waste resources. Drive gas-guzzling cars, fly all over, turn up the heater and the air conditioner, build those 5,000 sq foot mansions. Live it all up. Just remember, when the party ends, and it will, there will be nobody to turn to. Evolution has a nice way of dealing with such excess. It is called extinction. And it is as much part of the natural world as the creation of new species.