A topic for Bedlamites to get their teeth into....

The world's economic crisis is not entirely and not even largely due to the failure of the capitalist financial system. It has more to do with the failure of democracy. Voters were not able to effectively get the message to their elected representatives that what was (and still is) going on in the world is unsustainable. Law makers failed to act and the economy collapsed. In fact, law makers ignored people who warned this was coming and did the very opposite, yet very few voters complained. The law makers are similarly ignoring warnings on climate change yet the people do not complain. It's like were being led to a cliff by the Pied Piper.

So given the above I'd say that democracy is dysfunctional as it is currently being practised. Yet, wars are being fought over it and it's being promoted as utopia and rammed down the throat of everyone including those who are violently opposed to it. Democracy is like a giant Ponzi scheme where it's great for the early guys but a disaster for those who come later and unless the early guys keep getting new democracies into the scheme it will eventually collapse because it can't deliver what it promises.

So if this is the beginning of the end for democracy, what's next ?

Greed's hard to cure. (Read "failure of the Capitalist system").

Maybe global warming will genetically modify germs and viruses (viri?) which will wipe out 99.8% of the population with the survivors reverting to village life and a true Communist society.

It's a plausible theory. When a body is infected it either purges or kills off the infection or dies trying. Nature works in much the same way. Mankind may well turn out to be no more than an infection of nature.

Very outside the boxish for general bedders. (I was waiting for the punchline and it didn't come.)

A large part of the problem seems to be greed related. As an example (simplified to the nth degree), executives these days have shifted the focus far to much towards the bottom line (return for shareholders on their investment) and less towards the customer. Conglomerates control markets and pricing to a large extent, so it is self-perpetuating. They source from the cheapest input markets for delivery to markets with the highest return. Prices go up, wages go up, the divide between rich and poor widens, etc, etc. In those circumstances, every now and then a crunch has to come to return balance. I was caught-out rather savagely by the crunch, but I'd far rather have the choice and freedoms of democracy than have many of my freedoms curtailed under a communist regime.

Bring on McCarthy.

Although it is an over simplification, greed is the biggest driving force for the current turmoil. Did you see the banker that said his one million pound salary and 1.9 million bonus was a modest pay!?! These guys just aint living in the real world.

Then the banks that have been bailed out using tax payers money want to pay massive bonuses within 6 months of the bail out. Doesn't anyone stop and apply some common sense (I know, it aint that common!) and say, 'If we didn't have the bail out we wouldn't even be in a job?'

Yes, the world's gone mad.

re the op, I can't see it being the end of democracy, although democracy may bring some changes to the current situation. People are unhappy, so they may transfer their votes to the party they think will bring changes. And so it goes on.

All this global eonomic crisis appears to be that many banking people were too greedy for their commissions and lent out far more money to doubtful borrowers than they should.

Thus there is not enough money in circulation and no one is spending.

But if people are not spending, what are they doing? Putting into their bank accounts? If so, why are the banks in trouble?

Ten years ago there was money to burn. Now there's no money. Where is it?

I don't understand this at all. I was thinking of asking my wife, but she can't tell me what happened to the muen baht I gave her yesterday.

All democracies have a shelf life as it's a self dealing ideology. I agree that greed is at the root of the current financial crisis, but in truly democratic fashion, it is the peoples greed that created the problem. Politicians and bankers will lie, cheat and steal to get their hands on the peoples money, and when the people are making money from these corrupt machinations they turn a blind eye to their citizen oversight responsibilities, which are part and parcel of democratic governments. Come the reckoning, well you find a few poster villians to pin the blame on and then the people feel good about themselves till they create the next instrument of their own misfortune. Have to say I like the communist ideology better, but we the people aren't yet good enough to pull it off.

To respond to Humphrey B. the money is not lost. real money still exists as cash but the paper money has disappeared.

Ping is right in saying that there has been too much focus on ROI (return on investment).

What happened was that investment funds became major shareholders in corporations. They installed their proxies on the boards of the corporations they invested in. To continue the growth of the funds they needed to present a record of returns to the investors (mums and dads) in those funds0. Therefore their proxy directors were told that the company had to achieve X% ROI so the fund could say it returned X% over a year. Each fund was attracting new customers based on their YOY performance. Boards didn't make prudent decisions for their business, they made decisions to achieve the institutional investor's ROI target. These targets existed regardless of whether the company was in a position to deliver or not.

Again, I say that the root cause of this whole fiasco is with individuals (all of us) who believed the hype and BS that the gravy train would never end. When we as individuals choose to invest in funds we tend onlt to look at the YOY return, not the sustainability of the fund. We are all responsible for what has happened.

So far, the penny has not dropped that people are just as responsible for this mess as are the wall street bankers. if we didn;t give them our money to play with how could they do what they've done ?

Continued denial of responsibility by each and every one of us ensures we will revisit this disaster again and again. Should we really be giving our money to strangers and trusting it will be managed by watchdogs who are funded by the very same people who we give our money to. this is not rational. Hence my belief that democracy as it exists today is dysfunctional and a major part of the problem.

^^ To add:

I'm not against democracies, on the contrary. I would say that they only work "in the long run" through a high percent of participation of the populace who votes "in its enlightened self interest". Most of the time self interest rules the day, but it is a very short sighted self interest.

All democracies have a shelf life as it's a self dealing ideology. I agree that greed is at the root of the current financial crisis, but in truly democratic fashion, it is the peoples greed that created the problem. Politicians and bankers will lie, cheat and steal to get their hands on the peoples money, and when the people are making money from these corrupt machinations they turn a blind eye to their citizen oversight responsibilities, which are part and parcel of democratic governments. Come the reckoning, well you find a few poster villians to pin the blame on and then the people feel good about themselves till they create the next instrument of their own misfortune. Have to say I like the communist ideology better, but we the people aren't yet good enough to pull it off.

A well thought out post, thank you.

Just to echo some prior comments, democracy, communist, socialist.... they are just labels..... doesn't really matter which one you use or which one you live under or follow.... irrespective of which system is in place, there will always be a few me me me me me's in place, and it is those that screw up any system, while greed is such a powerful force in human nature (for some) nothing will ever change.

And consider the globalisation of many major companies, where a few non-elected directors run budgets larger than the budget of all but the twenty (or so) largest countries.

There is no real thought of social responsibility to the public at large - just to the shareholders and - possibly - to those in power in the countries in whic they operate. Not just oil companies, but most of the primary resource companies such as Rio Tinto, BHP, Mittel-Arcelor and of course GN, Daimler-Chrysler, Ford, Toyota, Sony, Mitsubishi (in it's many diferent guises) and many others.

I have, personally, been quite lucky with regard to this crisis - so far. My personal retirement fund matured a couple of years ago, when the FTSE was at 6,200. I was considering keeping it in force, but the opportunity to buy a certain house in Pattaya came up, so I cashed in, used some of the money to buy the house (in my wife's name) and stuck the rest in the bank. Now the FTSE is at 4,200 and I have moved back into the market with a chunk of that retirement fund, 'coz I can't see the market going much lower - and if it does we're in deep trouble anyway. So I've got just about as many shares as I had before, plus a house. Just hope that things recover over the next five years and that I keep earning in the meantime.

But Sibeymai - who is holding all this actual money? Bank of China?

Everyone is screaming about lack of liquidity, yet the money is around somewhere. Wealth has been created. I just want to know where it is. All this notional money that has been lent by anks, invested by hedge funds and so on must have some foundation in actuality, surely? People cannot just tuen round and say "I'll lend you a million" without having at least a part of it in their pockets. And the borrower must have some means of servicing that debt, or forfeiting his collateral.

All this notional money that has been lent by anks, invested by hedge funds and so on must have some foundation in actuality, surely?

For most peoples sakes, I hope you are right, but I suspect that you are wrong.

But Sibeymai - who is holding all this actual money? Bank of China?

Everyone is screaming about lack of liquidity, yet the money is around somewhere. Wealth has been created. I just want to know where it is. All this notional money that has been lent by anks, invested by hedge funds and so on must have some foundation in actuality, surely? People cannot just tuen round and say "I'll lend you a million" without having at least a part of it in their pockets. And the borrower must have some means of servicing that debt, or forfeiting his collateral.

A company has a value reflected by it's share price. The value is based on a number of things with assets being a part. Assets can be considered as tangible things such as land, equipment, stock etc. But the company's total valuation as indicated by its share price includes non-tangible things such as market share, future earning potential (revenue), value of shares, whether the company is paying a dividend and how much, what rumours are circulating, etc.

Banks lend money to companies on a different basis than they do to the average individual who buys a house. For a company a bank will consider including non-tangible assets in determining how much to loan such as a company's future revenues. When the value of all these drops the bank may find the loan amount exceeds the value of the security. If the company can not service the debt (sales revenue drops) then the bank must realise the value of the security.

Customer A and Customer B each deposit $50. The bank has $100. The bank must keep $10 in reserve so it can loan $90. Company A wants to borrow $50 and shows it has assets of $75 made up of $15 land, $10 cash, $10 equipment, 5$ stock and $35 in equity (share value). But a year later the company is broke and the bank recovers the debt. They get $10 for land, $0 cash, $5 for equipment, $0 stock and $5 for equity - a total of $20 against their original loan of $50. The bank looses $30.

However, the bank still owes depositors $100 and of the $90 the bank had available for loans they now have only $60 available for loans (90 - 50 loan = 40, 40 + 20 recovered = 60). This is what creates a liquidity problem known as a "credit crunch". $30 has "disappeared". If enough loans fail then the bank has no money to loan but still owes depositors. When the loan losses are greater than the deposits the bank fails.

All this notional money that has been lent by anks, invested by hedge funds and so on must have some foundation in actuality, surely?

For most peoples sakes, I hope you are right, but I suspect that you are wrong.

And that was 'banks' - not 'anks'.

I've been told to use a spell-checker but it never seems to work on TV (or this computer). Harry Potter - where are you when we need a spell?

I can remember a time back in the late '60's when second year apprentices were foolhardy, rash, degenerates who would blow their weeks wages on beer and women on a Saturday night and be on the scrounge until the next Thursday. Bankers, on the other hand, were staid grumpy old gits in pin stripe suits who you had to grovel before in order to secure a 30 quid loan to purchase a tatty old motorbike. They used to ask such piercing questions as "and just how, on your wages, do you intend to repay this not insignificant loan of good money from the bank?"

How the times have changed.

But does the current economic debacle signify the end of democracy? Well China is in the sh1t and they aren't democratic but I supposed they depend on the democratic world to buy their cheap junk. But no, I don't see it as a byproduct of democracy, functional or dysfunctional, nor was it a result of the politicians not listening to the people. Nobody was listening to the few economists that were saying that this is just not sustainable. Everybody was too busy buying the latest plasma screen TV on credit to care where the money was coming from. Everyone was just riding along on this huge wave that was going on forever, now the wave has died and the surfing is over and everyone looks for someone else to blame.

I know regular Joe Soap consumers aren't to blame for the majority of the mess we are in but it pisses me off. You have these folks borrowed to the hilt for all the latest shiny gadgets, with 140% mortgages on their homes and they are in the sh1t. On the other hand you have people who owe nothing to anybody and have their life's savings teetering on the edge of worthlessness and they did nothing wrong except live their lives frugally as all should have done. Maybe the governments should look out for those in credit first and make sure they are okay then give what's left to the wastrels. Not realistic I know as a lot of the people have their life's money invested in dodgy schemes that are going belly up but at least they tried to look out for the future.

I don't think anyone will trust the banks again for a long time.

This fellow 'anks' seems quite generous with his loans. Hope it doesn't get him into difficulty.

rarocacy is the answer! I promise better pills, cheaper booze and bigger boobs

You'll have a lot of people voting for you with slogans like that!

Not me. I hate taking pills, I'm off the booze and if I liked big boobs I'd be living in Sweden, not Thailand.

Is Sweden known for it's big boobs?!?

I thought boobs went with blondes like port went with nuts.

I can remember a time back in the late '60's when second year apprentices were foolhardy, rash, degenerates who would blow their weeks wages on beer and women on a Saturday night and be on the scrounge until the next Thursday. Bankers, on the other hand, were staid grumpy old gits in pin stripe suits who you had to grovel before in order to secure a 30 quid loan to purchase a tatty old motorbike. They used to ask such piercing questions as "and just how, on your wages, do you intend to repay this not insignificant loan of good money from the bank?"

My first job at 17 was in a bank. The Bank Manager wore a black jacket & waistcoat, grey striped morning trousers and a shirt with a detached stiff collar. My first job of the day was to iron the Manchester Guardian (aka the Guardian) before he read it. He looked a bit like Captain Manwaring but he was a very scary man.

When my father started his apprenticeship before WW2 he says the furniture workshop foreman came to work in a suit, tie and bowler hat and changed into a dust coat and overalls when he got to work.

Amusing recollections, Endure and Scea - antitheses of the Four Yorkshiremen.

He, and I suppose I do as well, very much believed that clothes maketh the man.

Even now I won't go into town, and Chiang Rai is hardly Pall Mall, with out long pants, shoes and socks and a shirt with a collar.

Shorts, frip frops and tee shirts are for <deleted> tourists.

Amusing recollections, Endure and Scea - antitheses of the Four Yorkshiremen.

I don't know why but this made me think:

"The Four Yorkshiremen of the Apocalypse"

555 now there's a thought!

A scary one too...

The G7/G8 (or whoever they are) are heralding sweeping regulatory changes to the stock markets of the world. According to some banks are likely to be nationalised and possibly some related industries such as insurance and provident companies.

It appears that we are entering a repeat of the post Great Depression era where nationalism of specific activities was held as being in the best interests of a country's economy. Of course, as the lessons of the era became forgotten with the passing of a generation the nationalised companies were one by one sold off to pay for the debts governments began incurring, and also to provide "gifts" of (in most cases) profitable companies for politician's financial backers.

Now governments are borrowing like crazy to stimulate their economies when they know full well that excess borrowing is a major cause of the problem. Then, how can borrowing more money fix the problem ?

No doubt some banks will be nationalised as the governments who have bailed them out realise this is the only way to protect their "investment" and control the behaviour of executives including salary and bonuses.

Dow now down 50% from it's peak in 2007. Now at 1997 level. No bottom in sight yet. Time to start planting vegetables and raising chickens on the farm.