Major factors behind the global economic meltdown:
Historically low interest rates held for a very long time.
Vast amounts of money spent or committed by governments.
Banks' tele-sales people pestering consumers with phone calls offering credit cards.
The financial industry creating 'complex financial instruments' (actually worthless pieces of paper), sold to each other and unsuspecting investors for huge amounts.
Huge salaries and bonuses for bankers and other business executives, based on short-term (this year's) profits and share prices.
Retailers offering big-ticket items at big discounts with no deposit, nothing to pay for several months and financing at very low interest rates.
How we're dealing with the global economic meltdown:
Historically low interest rates held for a very long time.
Vast amounts of money spent or committed by governments.
Banks' tele-sales people pestering consumers with phone calls offering credit cards.
The financial industry creating 'complex financial instruments' (actually worthless pieces of paper), sold to each other and unsuspecting investors for huge amounts.
Huge salaries and bonuses for bankers and other business executives, based on short-term (this year's) profits and share prices.
Retailers offering big-ticket items at big discounts with no deposit, nothing to pay for several months and financing at very low interest rates.
Insanity: doing the same thing over and over again and expecting different results.
Albert Einstein
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3 comments:
The problem here IS the interest! The worst is yet to come http://captaink.blogspot.com/2009/05/next-twenty-years-are-going-to-be.html
LOL, good point!
Seabee, love your blog but I have to disagree on a few points:
"Banks' tele-sales people pestering consumers with phone calls offering credit cards."
It's not the pestering that caused any of these problems. It's the lending. They lent money to people who couldn't afford it. Credit was too loose. The problem started here in the US when Fanny and Freddy were making loans they knew were bad and knew that they would be bailed out.
"The financial industry creating 'complex financial instruments' (actually worthless pieces of paper), sold to each other and unsuspecting investors for huge amounts."
Not so. I worked in alternative investment for 5 years so I understand them pretty well esp. wrt to CDO's. Alternative investments are hedges and are zero sum. Somebody wins and somebody loses. Notice the largely unregulated hedge fund market was untouched by the collapse. By nature they hedged against it.
"Huge salaries and bonuses for bankers and other business executives, based on short-term (this year's) profits and share prices."
Not so. The bonuses are a pittance compared to the lost value. That valuation loss was based on perception. Housing prices have been outpacing wages for decades. The artificial inflation of the housing market precipitated it's collapse not any sort of bonuses. NB: Most people at the C Level (CEO, CFO etc) get most of their comp in stock or deferred comp. The guys who get their money in cash are portfolio managers and traders but that's a whole other post
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