Credit Crisis for Dummies

Call it simplistic if you like but here's how it looks to me.

As the West moved from a land based to an industrialised economy, labour followed. Mining, heavy industry and manufacturing formed an equitable partnership providing profit for the investor and meaningful work and dignity for the workers. Urban workers needed essential goods and capitalism needed producers. The perfect partnership.

A period of affluence followed, richer workers became shareholders and shareholders, hungry for profit, moved manufacturing off shore to cheaper labour markets, Workers in the west became educated, stopped producing and began managing the process of global production distribution and sales. However as well as producers, capitalism needed consumers and production was fast outstripping consumption. Answer, the credit industry.

A stimulated investment industry talked up the value of shares and real estate against which to secure it's credit advances thus providing more and more consumers with more and more spending power to consume more and more goods and services. But the new talked up values were confidence rather than reality based, and the result: was an international credit blow out.

Answer? Run the same scenario in the developing countries where manufacture (but not consumption) is now centered. Offer them the credit they need to become consumers instead of simply producers. That should fix the problem, at least in the short term.

Have we really got the keys to the asylum, or have we given them to the financial inmates?