One aspect of the current economic down cycle that nobody seem to care about is the shortage of ideas about the future. People are so obsessed with discussing the dire situation that coming up 5, 10, or 20 year plans for a better future is not in vogue anymore. Politicians generate empty statements about the economy and promise that one day it’ll get better. Pundits spend their time bitching about the economy, blaming everybody and generating predictions of doom and gloom. Chitchats with friends revolve around how the crisis affects our lives and how difficult it must be for Joe who just lost his job and his wife is due in two months. Office banter deals with the sorry state of the industry and the negative effect on the company.
No one, however, seems to spend time and energy coming up with viable and creative solutions that will not only get us out of this mess, but actually create a bright future for are grandchildren.
So why am I telling you all this? Not that I have a brilliant solution or anything. I’m just intrigued by the drought of positive ideas, wondering if it is an effect or part of the cause. The consequence of pessimism in the stock market is well known. But here we deal with a much wider system, involving every aspect of the global economy. Is it possible that lack of productive ideas about the future lead to increased interest in unproductive financial transactions, which in turn got the best brains deeper and deeper into trying to profiteer on the financial spaghetti they created? Once they embarked on creating complex derivatives, repackaging mortgages as securities, and relying on credit default swaps, could they have simply exhausted their ability to think about funding productive enterprises? Did it make them lose their famed ability to imagine and fund a better future? Bright people like Bernie Madoff spent their time and intellectual ability ripping off other people and taking advantage of the booming stock market, instead of channeling this energy into creating a better future.
The gradual decrease in IPOs in the last several years was blamed on many factors. What if one of the reasons for the lack of IPOs, and the fact that there’s no real alternative, is the same one outlined here? What if all brilliant financiers were simply too busy making money they just didn’t have time to do their job?