ABSTRACT
This chapter discusses the gap between economic theories and financial reality through the study of capitalist and socialist economic theories while revisiting the different financial crises. The reality gap identified is that neither the private capitalist economic systems nor the public socialist economic systems have proven to be able to free humanity from financial turmoil and devastation. As a result of the sub-prime mortgage crisis, the federal takeover of Fannie Mae and Freddie Mac poses further challenge to the free market system. Whilst placing these two Government-sponsored enterprises (GSEs) into conservatorship incurred a massive cost to the US taxpayers, more unfortunately, the present economic recession, led by the sub-prime mortgage crisis, has become a massive cost to every citizen of the world. This chapter provides a better picture of the common features shared between the Five Elements and critical theory. The Five Elements (), the school of Yin and Yang () promotes the importance of attaining and maintaining a balance.
