Corrective measures envisioned by lawmakers in the heat of the financial crisis are directed toward strengthening oversight of financial markets. The regulatory system including the Federal Reserve, the Securities Exchange Commission, and other Federal agencies collectively may have been unable to detect the formation of a speculative bubble in the housing market; or perhaps the system detected problems but failed to act on a timely basis. Interest rates could have been raised to reduce the amount of credit available for house purchases, and abusive lending practices could have been curtailed giving potential buyers more accurate information about their ability to carry a mortgage, and thus reducing the chances of defaults and foreclosures later on.

Overhauling and strengthening regulatory oversight of financial markets is a sensible step, but not enough to prevent a recurrence of the frenzied pursuit of profit that precipitated the crisis. Not all mortgage lenders succumbed to the lure of higher profits through securitization of loan portfolios.

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The financial crisis that began in 2007 and reached fever pitch in the past few months is generally believed to be a consequence of the securitization of subprime mortgages and more generally of the over extension of credit. Participants in this tragic drama include actors in the real estate and financial services industries as well as home buyers.

The process of purchasing a house consists of a long chain of transactions starting with a ‘meeting of the minds’ of buyer and seller, usually mediated by a real estate agent representing the seller. Once an agreement has been reached, the buyer must arrange financing. Here is where the trouble starts.

Let’s say the buyer uses the services of a mortgage broker to find a bank or other lender willing to issue a mortgage on the house. Having no responsibility for the future behavior of the buyer, and receiving a fee for its services, the mortgage broker’s interest is to place as many mortgages as possible. Real estate agents and property appraisers have a similar interest. Both work on fees or commissions based on sales, so their aim is to generate as many sales as possible.

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Google recently changed its earlier position regarding the use of the keyword “abortion” by anti-abortion groups to take out ads on Google… Regardless of the position one takes on abortion, this decision by Google is the right one in the interest of freedom of expression (while at the same time drawing attention to other past examples that highlights the thin line that separates freedom of expression from farce).

Google in Shift on “Abortion” as Keyword, NY Times, September 21

Google has limits on what can and cannot be advertised; it will not allow ads for products derived from endangered species, for example, nor will it allow ads promoting violence. In the past, Google would not sell the “abortion” keyword to religious groups, but did sell it to other groups, including secular groups, doctors offering abortions and resource sites like Our Bodies, Ourselves.

Google’s policies are based on a number of factors. “We build out our policies based upon local customs and business practices and, as any sensible business would do, review them from time to time to make sure they are up to date and current,” said Ben Novick, a London-based Google spokesman

These reflections on virtual organization are about the meaning and social significance of computers as mediators and brokers. Computers mediate between individuals by providing channels of communication in the form of messaging systems; they act as brokers in matching buyers and sellers, employees and employers, resources and work processes, etc. The explosive growth of electronic commerce on the Internet has made such functions commonplace. Computer-based mediation and brokerage lie at the heart of virtual organization, a powerful and flexible mode of organization founded on a separation of requirements from the ways in which requirements are met. Separating these elements allows managers to switch easily from one way of meeting a requirement (e.g., for an employee, a supplier, partner, etc.) to another. Used systematically, switching brings huge increases in productivity provided transaction costs are held in check. The price of this increased efficiency is that, practiced regularly, switching weakens personal and political loyalties. Absent a sense of loyalty to persons or places, virtual organizations distance themselves from the regions and countries in which they operate. Virtual organization is undermining the nation state. Government as we know it today cannot control virtual organizations and will have to cede its responsibilities and powers to them. A new feudal system is in the making.

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Virtual Organization – Towards a Theory of Societal Transformation Stimulated by Information Technology

[Google Books] … [Amazon]
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“Before Internet (BI), the historian Stavrianos (1976) wrote, “The Western world today is re-experiencing the decay and despair of its early post-Roman centuries.” Despite opposite causes – technological stagnation in the Roman Empire versus unbridled technological development in the modern West – both periods bear similar marks of decline…”

Reviews:
“…is a meditative and thought-provoking discourse on how modern information technology molds and transforms society itself… Virtual Organization is highly recommended reading which delves deeply into serious and complex forces driving the growth and change of our modern society.” – Library Bookwatch Review

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