Financial Market Meltdown: The Churn Theory

I console myself as I watch the grim headlines spit out by Google News and Yahoo! News each day by remembering that there is value out there. Workers somewhere are building stuff. Consumers out there are buying things. We just have a lot to churn through until the fundamentals appear rational again.

The sources of the churn are many. Incomprehensible derivatives. Too much liquidity. Lax lending standards. Mortgage fraud. Lack of common sense. Corruption.

And that is just a recent list. The churn has other vectors. Globally, we're still trying to integrate the post-USSR countries into the market. China produces, but it does not consume. It keeps its currency artificially weak. Europe is getting old. The price of oil is increasingly unstable.

For the financial meltdown to end, it will require time. During this time, policy makers should contemplate ways to mellow the churn. This will require a plan to stabilize currencies globally, develop alternative energies to power the BRIC economies and American drivers, and try to restore competition to the marketplace free and clear of liens held by political entities. There should be no systemic risk posed by any single company's survival or failure.