Barackface: A Brighter Future Ahead

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Big Crisis = Big Opportunity

I am for a second trillion dollar stimulus package. It was not the New Deal, but World War II that got America out of the flunk last time. We can't have a world war, but we sure can have a second stimulus package. And this second stimulus package has to have global dimensions.

Anatomy Of A Crisis

Money poured into America because the American banks were thought to be the safest for the elites around the world. What did they know? The American bankers did not know what to do with all this flush cash. So they started running ponzy schemes, legal ponzy schemes, subprime mortgage backed securities, credit default swaps, what have you.

The problem in the world is not too much capital, but too little. But the architecture of global finance made it look like there was too much capital, too few capital outlets. And so all that extra money went on to create a housing bubble. This was not exactly wealth creation, but it got counted as wealth creation in the banks' books.

Old White Men Need To Chew Gum
Needed: A New Global Financial Architecture
Stimulus: Make It A Trillion
Stimulus: Size Matters
Global Finance, Global Terrorism, Global Warming

Too Many Big Banks

If a bank is too big to be allowed to fail, that bank is too big, it should be broken into a few different banks. And it is never too late to break up banks like that.

Transparency, Accountability

There are banks and regulations. And there is this huge financial sector that has so far stayed out of that tent, without regulations. That is bad, that always was bad. Got to bring the entire financial sector under the tent. Infuse massive transparency and accountability. You can't play great soccer without the basic ground rules. I am all for the market, I am all for innovation. I am not saying the referee should now join the game. I am saying we need a referee.

America Can't Do It Alone

Over the past few years we have seen wild wildfires in Greece, California, in Australia. In each case the culprit was global warming, but local law enforcement hunted for arsonists.

Imagine a climate version of this financial crisis. Imagine a dirty bomb each in 10 big cities of the world on the same day. What we are going through is a finance version of such worst case climate and terrorism scenarios. The finance version is less heartbreaking, and it is so very heartbreaking as is.

But this is dress rehearsal. Handling this crisis will and should help us build mechanisms to deal with some future crisis in a different domain. More importantly, we should learn to prevent them. Could America and the world have taken actions over the past few years to prevent what is happening now? You bet.

Democratize the IMF, World Bank

Treat the people in the Global South like human beings. Pump more money into both. Bar the two from humiliating the poor countries every time they deal with them.

A Global Marshall Plan Needed

We don't need a world war, but we do need a global Marshall Plan. I am not sure about old fashioned aid. I am proposing a trillion dollars into microfinance. If the US Treasury gives a 5% return, microfinance gives twice as much. What has China been thinking lending Bush a trillion dollars to wage a wrong war? It should instead get into microfinance.

Big money needs to get into big infrastructure projects across the Global South. We have to make major investments in human capital.

Microeconomics, Macroeconomics, Globoeconomics

The theoretical framework of the academic discipline is not aware the world exists. Just like economics added macroeconomics to its body about 70 years ago, now is time to add globoeconomics to the same. The theoretical framework is missing.

Long Term Goal: World Government

Christianity is just one among many religions. America is just one among many countries, definitely true of Britain. When we are talking global cooperation on issues like climate and terrorism and finance, ultimately we are talking of a world government, anathema to the right in the US. But it is cooperation or doomsday. That is the stark choice. This financial crisis is dress rehearsal.

Global Finance: New Architecture

The ad hoc ways of global finance so far have proven so very inadequate. We need a framework. We need ground rules. We need transparency. We need accountability.