Showing posts from February, 2009

Theory of Constraints - primary culprits of economic meltdown are a few regulators & their criminal negligence!

From Wikipedia I could get the material I read long time back . The current situation of globally interconnected complex financial network should actually have fewer constraints to manage.
These constraints must be by the regulators who have to choose the critical parameters to be observed and strictly controlled. When not done in time it could be a case of sudden collapse causing the correction.
Now that the constraints to keep the equilibrium actually are fewer which means it only needs failure of very few institutions or persons in charge to cause global meltdown. 
May be we can count on our fingers the major regulators like Greenspan, Chinese Wen, and regulators of Europe or say the G7 countries who failed to do their due diligence.
The inexcusable failure of regulation and managing the constraints as required by the persons in charge , very paradoxically have no punishment while the players suffered and the system is collapsing. Institutions like SEC slowly wake up now and deliver wo…

Hayekian Recession and A Iyer

Very thoughtful but the same facts-Asians saved and Americans spent! We cannot recreate the bubbles and Happy Evenings with all the trillions pumped in -- which again is fictitious money though of sovereign nature.
Simple rule of financial viability so that a unit of money spent which represents effort, produces a return  without eating into the capital, once violated, we have set off the time bomb. It will blow in our face sooner or later 
Innovation and improved productivity- the age old concepts are very relevant but unfortunately lost in the mire of financial innovation which discounted technology innovations and actually propped up outdated technologies beyond their useful lives. In the last generation substantial talent was sucked away from engineering industry by the high return soft skilled financial sectors with unwarranted bonuses  for creating the bubbles.
May be we have to find our feet in this turmoil by looking outside the financial czars who have messed up our lives.