Why don't they sort out this mess?

This is the question to the world leaders, Barak Obama and Angela Merkel. Of course they will have to do it together with other leaders, from China, the EU, the UK. What has to be done was written long time ago. These are quite simple steps described in "Prime Minister, sort out this mess, please" but executed globally. It has to be done in a coordinated manner. As the financial markets degenerated into activities which do not carry any economic value but, at the same time, affect the nominal debt and liabilities between countries and institutions, the world financial markets have to be suspended. On a Friday afternoon, after the closure of the last financial market, the world leaders should announce such an action and start an immediate process of restructuring of debt and financial markets described in "Prime Minister, sort out this mess, please". Part of this process should also be agreeing new rules (like abolishing credit rating agencies in the current form) according to which the financial markets can reopen and function. The capital flows in and out currency zones, like a euro zone, should be suspended for that period (and only allowed by a relevant central bank under extraordinary circumstances).

In practice such process is not dangerous at all. It is simply a long global weekend of the financial markets. No one losses anything by such action as everyone will have what they have had at the time of closure. Of course the outcome of the negotiations will change that but it would be agreed write-offs rather than a messy degeneration of the value resulting from financial gambling. And if it is not done like this, it will happen anyway, one way or another, but quite likely after a global bust up: basically a massive war or a series of wars.

Incidentally the problems that the governments currently experience with the financial markets are not new in history at all. At the end of the 19th and the beginning of the 20th centuries, after the Second Industrial Revolution, the US experienced massive powers of huge trusts and monopolies like Rockefeller's Standard Oil. And the US government managed to deal with it successfully for the benefit of the US and the world economy. Broke it apart. The Sherman Antitrust Act was enacted. Despite two world wars disasters, this was the foundation for the western world economic success of the 20th century.

Looking ahead 200 - 300 years, the future generations will judge the current period in history not too favourably. At best the current financial crisis, caused by quite primitive, easy to understand and predict its consequences the massive global pyramid scheme, will be laughed at and compared to Tulip mania in the Netherlands in the 17th century (e.g. toxic waste financial instruments compared to Tulip bulbs), but more realistically, with an element of distance that the time will give, it is very likely that the current political and financial elite will be looked at as a bunch fraudsters (manipulators) and idiots (who were manipulated). This is not actually the view of the author of this blog but an analytical judgment, i.e. a probable scenario, that the current world leaders should also take into account: how they are likely to be seen by the future generations. But they might not even be able to do that.