Economic Crisis Prevention – A Problem Solving Strategy

An Economic Bubble Can Be Recognized Early

The Strategy of Preventing Bubble Problems

The experienced problem solver soon realizes that much time, money, and energy should be devoted to the problem solving strategies designed to prevent problems before they become big headaches.

Social Problem Solving Includes Bubble Prevention & Economic Crisis

Social problem solving in all areas of our country’s activities, including prevention of harmful bubbles, can be greatly aided by the use of the scientific method of problem solving. The situation at present is that, while our natural scientists have been trained to follow the scientific method of problem solving for more than a century, our social scientists have made only limited use of it. This is a long story and is told in my book End the Biggest Educational and Intellectual Blunder in History (2005).

~~~ The Economic Bubble Ending in 2008 ~~~

The Housing Bubble

Housing values increased faster than normal for a number of years, and prices rose to a level at which the average worker would have to spend 50% of his or her monthly earnings to make monthly payments on the purchase of a home. This was a clear danger signal of a housing bubble.

Lending on Bad Mortgages - The Mortgage Bubble

For several years it was public knowledge that requirements for obtaining a mortgage were very lax and that these and other mortgages were being bundled into securities sold with a high quality rating. This resulted in a mortgage bubble that couldn’t continue and added to an economic bubble.

Other Reasons for the Economic Bubble & Economic Crisis

Excessive risk taking in bad mortgage securities, among other things, has contributed to our economic collapse. I am no expert on the situation, but I am an expert on the lack of teaching and training in problem solving and prevention in our schools and universities.

Where Were the Economists?

There were only a few economists who issued warnings about the bubble and they were not listened to by their fellow economists and others. In Chapter 43 (pages 413 to 424) of my book End the Biggest Educational and Intellectual Blunder in History (2005), entitled “Harms to the Field of Economics Caused by the Blunder,” I warned that the domain of economics is not a science today, although it should be. Economists are not adequately, if at all, taught and trained to use the scientific method of problem solving

Where Were Our Business & Industry Leaders?

In Chapter 46 (pages 431 to 434) of my book I point out that the lack of use of the scientific method by our leaders was very harmful to our nation.

With an economic bubble, a housing bubble, and a mortgage bubble, where were they? They, too, have not been adequately taught the scientific method of problem solving.

~~~ The Future of Bubbles & Economic Crises ~~~

The Use of the Scientific Method of Problem Solving and Decision Making Can Aid Recovery

We will have to suffer from the excesses of the past few years. But today America has a huge number of entrepreneurs, scientists, engineers, business managers, and trained workers and a developed capitalist system, so recovery will be faster than it was from the Great Depression.

Recovery and social problem solving can be greatly aided if the scientific method of problem solving and decision making, explained on this site and on www.decisionmaking.org, are used. So spread the word that we need to teach the scientific method of problem solving to prevent future bubbles and economic crises.