I do not believe this essay adequately covers all the aspects of the current financial crisis. The author is correct when referring to how banks and banking policies work. He states that there are issues in the current system that may have caused current events to happen the way they did and that the issues are identifiable and maybe even correctable. However, looking away from the macro system of the banking and finance areas to the global perspective, we are clearly not in the safe. The global reasons for these events have to do with the vast amount of money being spent on foreign oil and other foreign goods. Importing cheaper goods from foreign countries is actually hurting our economy, and we will continue to decline as a society until we stop making massive transfers of wealth to buy energy and other goods on credit.
Our financial system is very complicated in that it can start from negative opinions which lead to worse effects such as, drying up the demand for commodities, such as real estate, etc. This creates a panic situation where investors sell faster than expected, contrary to the generic rule of thumb, “buy low and sell high.” This results in fewer honored loans, and bank credits going bad.
Still we are not headed for full all out depression. Instead of going crazy on a selling spree, we need to hold back, reorganize our finances, remove all the wasteful expenses, and act with common sense. The economy will eventually bounce back and hopefully new long-term financial policies will prevent crisis’s like this from happening ever again.