Among the many memorable scenes in the now classic film The Godfather is the one in which Don Vito Corleone meets with the heads of the other Mafia families in New York to finally resolve a long internecine crisis over whether the families should engage in the drug trade.
The Don, who was seriously wounded by gunmen over the drug dispute and whose son was killed, rises in front of an ornate table and says, "How did things ever get so far?"
Today, the same question could be asked about the financial crisis that has spread virally worldwide since September. Induced by the drug of easy credit, mortgage companies, banks, and other financial institutions became addicted to pernicious lending practices poorly governed in a time of anti-regulation. Although the credit problem was present in the United States for well over a year, a tipping point occurred in September, igniting what seems like an out-of-control forest fire.
Economists will debate for many years what caused that tipping point, but the effects of the crisis will reverberate throughout the economy — and manufacturing — for months to come. How did things ever get so far? Old-fashioned greed, a lax regulatory environment, and the strange psychology of human confidence will all be blamed. Some might even say that the global economy itself, now so interconnected electronically by computer and communication systems, made the monster much worse. In the information age, bad news spreads just as instantaneously as good news.