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Trevor Blake: The Subprime Mortgage Lending Crisis [LINK-ZUM]

After Wikipedia: "The subprime mortgage crisis is an economic problem manifesting itself through liquidity issues in the banking system owing to foreclosures which accelerated in the United States in late 2006 and triggered a global financial crisis during 2007 and 2008." See also The Giant Pool of Money, an episode of the radio show This American Life.

More educated and articulate minds than mine have writen about this problem so far. But there is one small bit of analysis that I have yet to see. This problem seems to be a demonstration that capitalism is a self-correcting economic system. If one borrows more than one can pay, one will suffer. If one buys more than one can sell, one will suffer. These are some of the terrible and marvelous aspects of capitalism, and they are not found in socialism. Socialism has no self-correcting mechanism, a flaw that makes it a doomed economic system. No one should claim that capitalism can prevent suffering. Natural disasters and human error will make sure that suffering will be with us no matter what economic system we use.

Labels: money

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