The global financial crisis (or credit crunch, or mortgage-backed securities crisis or..you know it by now:) is the most talked, blogged, wrote, aired and so on, subject of the last few weeks (hence this post:) And it doesn’t show any signs that it’s going to be over soon. Among all the turmoil (great word, isn’t it?), many have tried to find both causes and solutions.
The theories spawned, in terms of source, went from the assumed lack of regulation from the supervising authorities’ part to the insatiable “greed” and “quest for glory” of the investment companies, from the fragility of the world’s economy to bad rumors and the overconfidence of governments in the (in)famous now, “invisible hand”.
As a relief, the story is even lengthier: everybody seems to know how to solve the issues, starting with politicians and regulators, to the global army of financiers and business consultants, each of them with its own ad-hoc solution: save the companies, don’t save them, buy equity, pump-in liquidity, buy the “toxic assets” (another catchy phrase:), set-up rescue funds, lower the interest rate!? and so on. Even the Pope jumped-in with a solution, referring to greed, in the way of re-thinking our “life’s goals” (and he’s not all that wrong actually).
No, I’m not going to give my view of how the crisis should be solved. I know better than putting-out opinions on things I don’t fully know, or understand for that matter. But, as there’s always a but, I will point out something: we’re in deep s*it. It’s not something that’s happening somewhere distant, in this almost virtual world of Wall-Street and financial entities. It’s not “out there” anymore, it’s everywhere:from small companies to large multinationals having trouble getting access to credit, from banks to funds, from people getting fired to those loosing their homes, from countries almost going bankrupt (i.e. Iceland) to governments in distress.
But it’s not that bad as it looks.
Actually, what’s happening now it’s quite normal – or at least, it was to be expected. Why? Well, this seems to be how things work now-a-days, this IS globalization. For so long know the effects and benefits of integrated markets, easy access to capital, foreign direct investments etc have formed a mantra for modernism, for capitalism, for prosperity (at least for the developed countries). What’s happening these days it’s just the other half of the glass, the empty one. The latest period is probably the globalization’s supporter greatest proof: the global domino effect in full, un-matched, un-tamed force. And this effect won’t stop until all the pieces are down and all the momentum would have been exhausted.
Faced with such a force, the important question which should be addressed now should not be how to stop it – simply because there are so many loose ends that it would be impossible to tie them all up – but when will it stop! Why is this important? Because answering this question would have to be done by looking for all the bad apples and laying them out in the open, thus avoiding surprises, which are now the most dreaded thing by investors.
This will give hope to all those affected, that there’s an end in sight and things will start going well again. Hopefully, not in the form in which they used to go about until now, or we’ll be again surprised by the very thing we’ve been working so hard to create: an integrated, global market.