Dear,
Since 2008 Financial Crisis, we decided to believe, conscious or unconsciously, that the crisis was just an accident; the sad consequence of the actions of a bunch of selfish, reckless banks’ executives, who blinded by greed, had converted the Capital Markets in a global casino of Credit Default Swaps, Mortgage Backed Securities and other exotic and incomprehensible financial instruments.
https://www.youtube.com/watch?v=iszwuX1AK6A
We can blame the bankers if that’s going to make us feel better; but if we really want to understand the magnitude of the problem, we need a little bit more than watching a great film.
If this was just a Banking crisis, it could be fixed by reshaping the banking system, but this is a systemic crisis which requires a systemic change. Obviously, in a capitalist model, the Financial System plays a protagonist role. Reshaping the financial System, it is a very important part of the solution, but it can’t be “the solution”.
For understanding this crisis it will help to have a look at the graphs below.
http://en.wikipedia.org/wiki/File:Oil_Prices_1861_2007.svghttp://upload.wikimedia.org/wikipedia/commons/e/e0/Components-of-total-US-debt.jpg
In the first graph, we see the historical evolution of the oil prices; as we can see, since the end of the Second World War till 1970’s decade, Oil prices had been kept relatively stable. And then as a consequence of the USA peak oil production and market cartelization, prices started to rise abruptly.
http://en.wikipedia.org/wiki/1973_oil_crisis
Oil is the most critical natural resource, and main responsible of the amazing period of growth the humanity has enjoyed since the starting of the Second Industrial Revolution.
http://en.wikipedia.org/wiki/Second_Industrial_Revolution
As higher prices of the resource responsible of feeding world’s economic engine made it less affordable, world’s economic growth should have slowed down, but it’s never easy to accept that unemployment rises, poverty increases and tomorrow we’re living worse than today.
Consequently, world’s leaders looked for an alternative source of growth that could maintain the economic engine running.
After some years of crisis, they found the alternative; global debt have been kept stable since the end of the Second World War, and it showed up as the alternative to finance economic growth, that could not be supported by cheap oil prices anymore.
The brilliant idea was replacing cheap oil by solvency, as the main resource to maintain economic growth.
Some constrains had to be eliminated; financial regulation, implemented after the 1930’s Great Depression limited the transformation; consequently a new era of financial deregulation started.
After that, maintaining economic growth by consuming financial solvency was possible. We started the new era of a Financial System driven by volume, starting a new phase of economic growth which was going to last during the following 30 years.
By 2008 financial solvency was consumed and became scarce, triggering the current systemic crisis, which started in the financial system, and spread on the following years, to the whole economy and society.
Six years later, we’re close to learn that we don’t have an alternative resource for maintaining historical rates of economic growth. Once again, our main problem is maintaining economic growth.
http://blogs.sap.com/banking/2011/12/07/its-growth-stupid/
As we’re in a capitalist system, banks are at the center of problem again, becoming protagonists of the transformation. When next November, European Central Bank audits make visible the financial system undercapitalization, we will start the new era of a financial system driven by efficient capital management, with multiple ramifications in the economy and society.
Looking forward to read your opinions.
K. Regards.
Ferran.
Since 2008 Financial Crisis, we decided to believe, conscious or unconsciously, that the crisis was just an accident; the sad consequence of the actions of a bunch of selfish, reckless banks’ executives, who blinded by greed, had converted the Capital Markets in a global casino of Credit Default Swaps, Mortgage Backed Securities and other exotic and incomprehensible financial instruments.
https://www.youtube.com/watch?v=iszwuX1AK6A
We can blame the bankers if that’s going to make us feel better; but if we really want to understand the magnitude of the problem, we need a little bit more than watching a great film.
If this was just a Banking crisis, it could be fixed by reshaping the banking system, but this is a systemic crisis which requires a systemic change. Obviously, in a capitalist model, the Financial System plays a protagonist role. Reshaping the financial System, it is a very important part of the solution, but it can’t be “the solution”.
For understanding this crisis it will help to have a look at the graphs below.
http://en.wikipedia.org/wiki/File:Oil_Prices_1861_2007.svghttp://upload.wikimedia.org/wikipedia/commons/e/e0/Components-of-total-US-debt.jpg
In the first graph, we see the historical evolution of the oil prices; as we can see, since the end of the Second World War till 1970’s decade, Oil prices had been kept relatively stable. And then as a consequence of the USA peak oil production and market cartelization, prices started to rise abruptly.
http://en.wikipedia.org/wiki/1973_oil_crisis
Oil is the most critical natural resource, and main responsible of the amazing period of growth the humanity has enjoyed since the starting of the Second Industrial Revolution.
http://en.wikipedia.org/wiki/Second_Industrial_Revolution
As higher prices of the resource responsible of feeding world’s economic engine made it less affordable, world’s economic growth should have slowed down, but it’s never easy to accept that unemployment rises, poverty increases and tomorrow we’re living worse than today.
Consequently, world’s leaders looked for an alternative source of growth that could maintain the economic engine running.
After some years of crisis, they found the alternative; global debt have been kept stable since the end of the Second World War, and it showed up as the alternative to finance economic growth, that could not be supported by cheap oil prices anymore.
The brilliant idea was replacing cheap oil by solvency, as the main resource to maintain economic growth.
Some constrains had to be eliminated; financial regulation, implemented after the 1930’s Great Depression limited the transformation; consequently a new era of financial deregulation started.
After that, maintaining economic growth by consuming financial solvency was possible. We started the new era of a Financial System driven by volume, starting a new phase of economic growth which was going to last during the following 30 years.
By 2008 financial solvency was consumed and became scarce, triggering the current systemic crisis, which started in the financial system, and spread on the following years, to the whole economy and society.
Six years later, we’re close to learn that we don’t have an alternative resource for maintaining historical rates of economic growth. Once again, our main problem is maintaining economic growth.
http://blogs.sap.com/banking/2011/12/07/its-growth-stupid/
As we’re in a capitalist system, banks are at the center of problem again, becoming protagonists of the transformation. When next November, European Central Bank audits make visible the financial system undercapitalization, we will start the new era of a financial system driven by efficient capital management, with multiple ramifications in the economy and society.
Looking forward to read your opinions.
K. Regards.
Ferran.
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