(no subject)

[randomness]

Societies do not function without trust.

What is happening now in the markets is what happens when trust--between banks, between companies, between people--disappears.

Nearly fourteen months ago, I posted about fear and suspicion being bad for markets. What I said is just as true now as it was then.

But when trust is gone, how do you get it back?

Comments

[dpolicar]

Well, you don't, but that's not the situation... it's not an all-or-nothing thing.
When there's only a little trust, you are restricted to small operations.
Which feels like nothing by comparison, but how you handle them can build more trust.
Or lose more.

[contrariety.livejournal.com]

The government guarantees everything.

[octopussneakers.livejournal.com]

but what if the government is the part you don't trust...Many issues with other countries in the past have been compounded by the government saying we're going to do a (or we're not going to do b) and then not doing a (or doing b), which means that when the government talks about it's actions with respect to c, d ......ZZZZZZ no one believes that's what is going to happen, which often makes it harder to trust that the government is going to do what it says

[hammercock.livejournal.com]

Think about relationships; the way to regain trust is for the person who abused it to then learn to act consistently in a trustworthy manner. What would it mean for the government and banking system to act trustworthily again? Certainly not stuff like AIG employees taking bailout money and having a fucking party with it! Y'know, for instance.

[marmota.livejournal.com]

Generally to a conservative, once trust is broken it's gone. Punitive, not rehabilitative, mindset. I don't get it, particularly as it runs counter to the supposedly pervasive christian mythos they follow. Anyway... it's funny how suddenly redemption is ok when *they* ask for it, just like it's not really socialism somehow when *they* ask the government to take over businesses, and it's not really blaming the victim to bail out shady loan sharks instead of homeowners stuck with fraudulent mortgage terms.

*cough* Sorry, got a bit off topic. They'll *want* to get it back, but they won't. My guess is the financial institutions will change their names and otherwise morph a bit into entities the public won't directly connect with any prior shady dealings. Starting from "no trust" is easier than starting from "untrustworthy", particularly with people unwilling or unable to do any research.

[babasyzygy.livejournal.com]

I'm hearing some Laurie Anderson now.

"And when all trust is gone, there's always Mom. Hi mom!"

[drwex]

Thank you. I was going to post that if someone hadn't already.

In answer to the original question - you do it by bringing in a neutral third party that is trusted by both sides. In this case I'm guessing it's the Fed who'll play that role.

Corn Maze. Matching Sweaters. STAT!

[ddreslough.livejournal.com]

Sounds like it's time for a massive Human Resources Trust Building Exercise!

If the planet does not have a large enough ropes-course handy, I think an Iowa Corn Maze will do.

And everyone must wear matching sweaters. EVERYONE.

[chain saw with a magician (from livejournal.com)]

We've created another generation that will never trust these institutions again, and probably rightly so. Those of us who are old enough to be paying attention to this are going to become like our laughable grandparents - burying gold bullion in the back 40. The next generation of children will grow up trusting banks, getting their 10% compound returns, and laughing at us just as we laughed at our old relatives who lived through the Great Depression. Then they or their children will learn the same lesson again.

Here's a different answer. Trust in the markets begins to get reestablished when the questionable assets become so cheap that they're worth buying JUST IN CASE the promisor comes through.

[stolen-tea.livejournal.com]

Starting from scratch, taking small steps, verifying all the way, until at some point we stop worrying so much and let it happen again.