The Financial Tower of Babel, Economic Strategies
In the Bible, people began to create a Tower that was to be a materialistic
ladder to Heaven. The Tower crumbled when the communication mechanisms
of finance were lost. In the last twenty years the global economy has undergone
enormous economic growth. Europe and North America, created a consumer
based, materialist Tower Babel made of debt and excessive leverage. This Tower
collapsed as confidence in the language of the financial world (debt, securitization,
leverage and antidotes trust, liquidity and interbank lending) collapsed.
Although the latest crisis appears to originate in the financial sector, the
origins are much deeper. Capitalism and the relentless search for competitive
advantage, has resulted in huge volumes and variety of goods and services.
Demand has to keep pace with supply, which marketers seem to understand, but
economists have ignored. Over the last twenty years, the manic search by firms for
competitive advantage has been most marked in the speculative mentality of the
financial sector, creating Towers of debt based on speculation.
The recent Tower of Babel, like the archetypal one, was built on illusory
foundations of symbols, or building blocks of assets that had value only so long
as people continued to deceive themselves that they had value. It was bound
to collapse at some time; the critical point occurring when the language of
communication broke down. The builders, suppliers and managers of the Tower
eventually ceased to communicate because they no longer believed the assets of
their trade, debt and liquidity have any real value.
But there are a positive effects, which may be dormant within the
complexity of the global financial network. They arise from its complexity and
independence. Perhaps we should understand the collapse of the modern Financial
Tower of Babel as signalling a critical point, opening up the possible emergence
of new languages and new
ladder to Heaven. The Tower crumbled when the communication mechanisms
of finance were lost. In the last twenty years the global economy has undergone
enormous economic growth. Europe and North America, created a consumer
based, materialist Tower Babel made of debt and excessive leverage. This Tower
collapsed as confidence in the language of the financial world (debt, securitization,
leverage and antidotes trust, liquidity and interbank lending) collapsed.
Although the latest crisis appears to originate in the financial sector, the
origins are much deeper. Capitalism and the relentless search for competitive
advantage, has resulted in huge volumes and variety of goods and services.
Demand has to keep pace with supply, which marketers seem to understand, but
economists have ignored. Over the last twenty years, the manic search by firms for
competitive advantage has been most marked in the speculative mentality of the
financial sector, creating Towers of debt based on speculation.
The recent Tower of Babel, like the archetypal one, was built on illusory
foundations of symbols, or building blocks of assets that had value only so long
as people continued to deceive themselves that they had value. It was bound
to collapse at some time; the critical point occurring when the language of
communication broke down. The builders, suppliers and managers of the Tower
eventually ceased to communicate because they no longer believed the assets of
their trade, debt and liquidity have any real value.
But there are a positive effects, which may be dormant within the
complexity of the global financial network. They arise from its complexity and
independence. Perhaps we should understand the collapse of the modern Financial
Tower of Babel as signalling a critical point, opening up the possible emergence
of new languages and new