Memorandum on the Economy

Despite facing through harsh times, this crisis will sift the way we operate and lead the revolution of a global economy which will last a lifetime. However we need to reflect on how we got to this point so we can learn from our mistakes.  The easiest way to put this situation is ignorance by investors in not following the clear signals that showed that an economic downturn was on its way. The fact that such an occurrence had never taken place was a main determinant in why investors took on more risk and disregarded all signals.  Alan Greenspan calling this a "conundrum" showed that even the most intellectual folks had no explanation.  So who is to blame?  Some people try to blame Capitalism but that is incorrect as it is a failure on Financial Capitalism not Capitalism in general.  All together we let the free market run will with no checks or balances.  We need to implement a system of checks and balances similar to the government to gain control of this kind of situation in the future. America has to help lead the World into a new age of a Global Economy.  One key factor that will change from this crisis is the desperation between Developed and Developing Countries.  In fact, countries like the U.S. and U.K. should use developing countries as an example right now as many countries such as China are currently in financial surpluses compared to the large amount of debt that we are facing back home. Developing countries have helped ease the crisis by offering aid to many Financial Institutions as China injected $5 billion into Morgan Stanley.  Overall this will lead us to witness a complete transformation in the systematic role of developing countries in the World Economy. This will take time to accept as just a few years ago developing countries were often blamed for economic downturns and in good reason.  With events such as the 1994 and 1995 Mexican Tequila Crisis, 1997 and 1998 Asia Crisis, as well as the lost decade of Latin America in the 1980's, emerging markets were unstable and had very little faith among investors.  Though now after offering a helping hand positions have switched with the lendee becoming the lender.  Emerging markets are becoming more and more stable offering faith to the investors.  We are slowly seeing the transformation of the world as described by Thomas Freidman in his book "The World is Flat".  Even though times are tough i believe the United States should not throw away its principles of Capitalism and Free Market Economy.  If we can implement a system of checks and balances to stop Wall Street from going wild.  In the end the system will thrive and respond quicker than everyone thinks.  One thing that Capitalism allows us is to act fast and if we take advantage of this we can stabilize our economy sooner than everyone predicts.  By accepting help and allowing the emerging markets to thrive it will only help us back home.