Human Capital #6--Trust

This is a revision of my post from 9/19. Wikipedia, the free, on-line encyclopedia says:

Trust is a relationship of reliance. A trusted party is presumed to seek to fulfill policies, ethical codes, law and their previous promises....Trust is a prediction of reliance on an action, based on what a party knows about the other party. Trust is a statement about what is otherwise unknown -- for example, because it is far away, cannot be verified, or is in the future.

Our current economic crisis is a crisis of trust. Investors believed that mortgage-backed derivatives were based on mortgages which were backed up with colateral. They weren't. Now, that the sh*t has hit the fan, no one trusts anyone anymore. That's because trust which has been built up over a long period of time can disappear in a heart beat. Now banks don't trust each other; people don't trust the government; people don't trust each other; the government doesn't trust banks; other countries don't trust us; and so on.

The good news is that trust can be rebuilt. We have to start somewhere. I think John McCain's proposal to buy up home mortgages is a constructive idea. I'd like to learn more about it. Somewhere, we have to start trusting each other. Until we do, we will never repair the damage.

What do you think? Go back and read my post from 9/19. And read the whole Wikipedia article and follow the links. If something resonates with you, post a comment.

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