We are in the midst of a deleveraging, we are nearly out of ammunition and we are at each otherâ??s throats. Being in a deleveraging and nearly out of ammunition is a very difficult position to be in. But, being at each otherâ??s throats is our biggest problem.
Our character and our political and social systems are now being tested in ways that have typically been tested in past deleveragings. In deleveragings bad economic conditions typically lead to emotional reactions, social and political fragmentation, poor decision-making and increased conflict. When this occurs in democracies, the checks and balance system, which is intended to yield the best decisions for the whole, can stand in the way of thoughtful leadership and lead to ineffective â??mobâ? rule. This dynamic can lead to a self-reinforcing downward spiral.
