Our Financial Markets Crises – Who’s Fault Is It?
Who’s to blame for the current financial markets crisis? The simple answer is everybody!
When Mortgage Brokers and Bankers are pushing home loans like too much candy at the county fair, what can we expect but an upset stomach the next day? Worse, we see the sickness but continue in order to feed the gods of profit. So they are blame. So everybody blames the greedy bankers. And that’s true; however they’re not alone in this blame game.
For too long the average person has bought into the fallacy that, above all, he must own his own home. It’s become part of our collective psyche. We as individuals have to take responsibility for our decisions and actions. When we take out a mortgage that eats 70% of our income each month, the outcome is foretold. We cannot claim fiscal illiteracy.
The middlemen buying the mortgages and bundling them up for investments are out to make a profit above all, forget about risk, forget commonsense and forget about their responsibility to their clients all in the name of profit above all else. They’re to blame for not tempering their risk appetite with a healthy dose of prudence.
The investors are equally at fault for not understanding what they’re investing in. Here too we cannot claim fiscal illiteracy. A 3rd grader wouldn’t be reading “War & Peace”, nor would I, a confessed banker, understand an advanced book on quantum physics. So why are people diving into complicated investment schemes without truly understanding them or the associated risks?
The government is to blame for over-regulation in some areas and under-regulation in others. Pushing banks to issue home loans to the masses because that’s what looks good in the polls. Even going as far as creating huge institutions to guarantee home loans, allowing the “people” above all to own their own home.
It’s no wonder financial liquidity is drying up in the market. I’d want to hoard my cash too if I were one of the financial institutions. So credit dries up for market players, which increases the failures, which in turn spurs financial institutions to stockpile their liquid assets for the day they might need them.
So when we dish out blame for the current crises, we, as a society, need go no further than our own bathroom mirrors.
