Catch-22 Crisis: The Toxic Trace – Part 3 of 5
When movies like Catch-22 begin to make sense on more than one levels, it’s time to wake up and take the antidote
This article follows on from Part 2: The Grand Plan
The theme of this episode is Toxicity. Toxicity is pretty much everywhere these days, from ocean seafood to bank assets. Yeah, we thought we’d had our hands full with pollution, until the financial crisis hit. Then we heard about the new stinky items of the day: toxic banks and toxic assets.
That was back in 2008, when the world almost collapsed. It didn’t, and we came back from the brink, saved at the nick of time by the controversial bailouts exercised by the US government and the gradual recapitalization of banks and the economy in general. Only we didn’t come back, not all the way. The money loaned to the banks was never loaned out to individuals and small businesses in turn, at least not to the extent the agreements had stipulated. Instead institutions too big to fail – saved so that the rest of the world would not go down with them, at the price of making them even bigger – kept the money for themselves to rebalance their sheets, at the expense of the individual investor and taxpayer, who, ironically enough, was given a handkerchief to deal with the economic drop.
Then came the European sovereign debt crisis, and with it the toxic nations. First Greece, then Ireland and Portugal, all of them riddled with unmanageable debt and growing deficits that had to be dealt with immediately in order to prevent their toxicity from spreading to bigger and more important fish, such as Spain and Italy, even France. The leaders of Europe came together to find lasting solutions to the crisis and reverse the damage, restoring health to the economy and its people.
So far not so good. Differences between key players have prevented any form of decisive action from taking place and the markets are reeling as a result, waiting for action, and so are investors. So are citizens around Europe and the world in general. Failure to deal with the problem can spread fast to adjacent countries and economies, affecting everyone. This is a disorder that spreads like wildfire and which everyone wants treated and gone.
Ideas how to do this have been presented. In theory, contamination will be prevented if bad debt is isolated from the rest of the world with firewalls, then backed and reinforced with rescue funds that will prevent the need for a rescue in the first place. See, with a safety net in place and the risk of total default averted, investors won’t flee from the area and economic stability will return. That done, with debt contained and sealed, and balance somewhat restored, attention can shift to fixing the entire financial bedrock. World leaders, economics experts, and big corporations will have breathing space to find a way to deal with the underlying problems by eliminating bad practices rather than selling them to the next highest bidder. After all, as they all know, recycling toxicity can only bring further toxicity, which is hardly what trade and enterprise are all about.
Here’s how the toxic trace is kept in our system. You be the judge whether this is satire or reality.
Image courtesy of:
http://1.bp.blogspot.com/_Kp1mDeqNHlE/Scq-0LW8jpI/AAAAAAAAAF4/_nB7DxhmZ18/s400/Toxic-Assets.jpg
[...] This article follows on from Part 3: The Toxic Trace [...]
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