Troubled Assets
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Troubled Assets • Posted: Mar 03, 2009 14:45:46Comments WelcomeVote CoolPhotoblogsPurchase a PrintShare

A confluence of many factors has resulted in the current world-wide financial crisis. However, a growing number of fingers point to something labeled "troubled assets" as both symptom and root of the problem. "Troubled" is a term often used to describe obstinate or belligerent teenagers. Is the term really appropriately applied to financial assets?

Assets are the physical representations of investment. The usual expectation for an investment is that it will perform, yielding either utility or a return. However, within the current financial climate a great many financial assets have begun failing to perform up to expectations. They either obstinately refuse to yield the expected returns or they obstinately refuse to be liquid. The underlying investment has become both useless and unrecoverable. These are the assets being labeled "troubled", and perhaps rightly so. But it seems more likely the investors are the ones who are troubled, not the assets.

A specious point? Perhaps. But the value applied to physical representations of investment is set primarily as a result of human psychology, not based on anything that might be labeled intrinsic worth. Value is almost entirely a product of mind. A house may be the same house it was 6 months ago. That it has gone from a cherished home to an albatross around a mortgage holder's neck is a trick of mind, not of the house.

I suggested in an earlier post, Vision and Story as Economic Stimulus, that an inspiring idea and a hopeful and realistic narrative pointing the way toward realization of that inspiring vision would go a whole lot further toward stimulating a reconstitution of our various economies than throwing money at old and increasingly inefficient and useless institutions. Similarly I now suggest all the so called "troubled assets" we hold could one day have equal or even greater value than they ever had if only the narrative by which we evaluate their worth were to be rewritten.

The world is waiting for that new narrative. Imaginative minds, start your engines.

Monday, June 4th, 2007
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