I'm no financial wiz...

but I thought I had a rough understanding of the roots of the financial crisis. In simplest terms, I thought it was due to bad loans - basically, abuse of credit by people that couldn't make their payments, and high-risk loans for homebuyers that wouldn't otherwise be in a position to own, coupled with banks looking to make a profit of such loans. And yadda yadda yadda, greedy Wall Street and deregulation, etc.

As usual, the real story is much more complex and far-reaching. Here is a link to a recent article from BBC News about the World Social Forum in Brazil. It's a bit long and tedious, but interesting if you have the patience. Specifically, check out this section, which gives a little overview of one participant's analysis of the factors leading up to the crisis. My oversimplification / summary is

1. Overproduction by industrialized countries, coupled with
2. Inadequate development of new markets (i.e., insufficient purchasing power in the rest of the world), which led to
3. Lower profits from manufacturing, which was overcome with
   
4. Investment in the "financial sector" to maintain profits, which resulted in
   
5. Decoupling of the "financial value" from the "actual value," which allowed
   
6. Rapid fluctuations in the value of financial investments, which allowed for
7. Formation of the "bubble," which has now burst.

Experts from all over the world have been meeting to discuss causes and fixes, and of course no one can agree. To some degree, the deregulated system in the U.S. became a model for deregulation globally (for more equal competition in the market), and that has enabled the collapse to spread globally as well.

The fix - duh - is gonna have to involve re-regulation, and on a global scale. We cannot continue with a total free-market model that has no intrinsic accountability and no bias against inequality. The dramatic differences between economies has allowed for sweatshop labor and outsourcing of jobs.

As we recover, we need work in protections for underdeveloped nations and act as "big brothers / mentors" for developing nations. As we claw our way back from the brink, we need to offer hands to our partners and would-be partners in the global economy, and elevate everyone in the process. Focusing on "green energy" is one way the U.S. hopes to fight the crisis, and the battle with global warming is a prime example of how everyone will benefit from working together. Helping countries like China develop renewable energy (instead of coal, etc.) will help their economy as well as reducing pollution, improving their health, and battling global warming.

We are living through a trying period right now, but the possibilities for what we may build from it are truly exciting.