The most important thing on many people’s minds now are probably the financial crisis that is occurring. Due to its enormity, the effects, like the companies firing employees to cut costs, can be felt all around the world. As the repercussions are huge, so we must be well prepared.
However, before I go on to the repercussions of the financial crisis, it is essential to know why it occurred. The roots of the crisis can be traced back to the previous years, where the economy was prospering. The Republicans, who were in charge then, overestimated the market’s ability to self-correct. They believed that the lesser government intervention the better, as the market could regulate itself better than the government could. However, an economy needs some discipline, regulation, and oversight too.
Alan Greenspan, who was then the Chairman of the Federal Reserve, had consistently advocated for the “loosening of regulations.” At the end of the ‘90s, when financial derivatives had just begun to take off in the United States, some pointed out that they lacked transparency, and that they should be more strictly regulated. Greenspan, abusing his authority, remained firmly opposed to regulation, believing that it would hurt the economy.
Under this laissez-faire policy, greed and corruption on Wall Street created a growing bubble, eventually leading to the current crisis.
The government encouraged house ownership. Houses were selling like hot cakes. The bankers, in a bid to attract more loans to be taken, further decreased the already-low interest rates for loans. This way, they could earn more money. In short, greed was the start of this whole financial crisis. The greedy bankers wanted more profit, so they did not consider the financi...
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...appened. If the bankers had lost their jobs, they can’t blame anyone else as they had brought it upon themselves. They should have gauged the financial ability of the people who were taking the loans. The blame should be on the greedy bankers. On the other hand, the borrowers also had a part in starting the vicious cycle that goes on and on. They should know their limits well and not have a “take-the-loan-first-and-we-will-see-how-it-goes” attitude. The government should have regulated the market, so that none of this would happened.
The whole financial crisis has its slight advantages too. The companies that were not run well were ‘kicked out’ and the survivors will ,hopefully, learn a lesson. After this financial crisis, the people will probably know how to avoid a similar crisis from occurring. This is ,perhaps, the only good that can come out of a bad thing.
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