The current financial debacle is really ... a crisis of overgrowth of financial assets relative to growth of real wealth [quoting Herman Daly]Having a relatively futurist outlook, I like to think that growth of wealth is ultimately unlimited, but I am also a realist and believe it is a bad idea to outpace your resources.
Whenever policy and business conventions make it really easy to ignore reality, watch out.
And be nice to the countries that lend you money:
Thirty years ago, the leverage of the investment banks was like 4-to-1, 5-to-1. Today, it's 30-to-1. This is not just a change of numbers. This is a change of fundamental thinking.
People, especially Americans, started believing that they can live on other people's money. And more and more so. First other people's money in your own country. And then the savings rate comes down, and you start living on other people's money from outside. At first it was the Japanese. Now the Chinese and the Middle Easterners.
We -- the Chinese, the Middle Easterners, the Japanese -- we can see this too. Okay, we'd love to support you guys -- if it's sustainable. But if it's not, why should we be doing this? After we are gone, you cannot just go to the moon to get more money. So, forget it. Let's change the way of living. [By which he meant: less debt, lower rewards for financial wizardry, more attention to the "real economy," etc.] [quoting Gao Xiqing]