The dust has not settled yet - but it is clear that the current financial crisis is more than a serious correction plus mega-negative psychology. And it has much more to do with plain old greed than any systemic shortcomings of "honest" capitalism. A picture is emerging of banks systematically loaning billions of (pick your currency) to ill conceived real estate projects. For example, in Copenhagen there are thousands of new apartments that cannot be sold - and thousands more on the verge of completion. Huge sums are being wiped off the books. Real Estate speculators and manipulators, who successfully borrowed hundreds of millions of (pick you currency) have shifted assets to their wives newly founded companies while they go bankrupt and banks collapse. In many sectors business leaders are taking the money and running away from responsibilty as they hope the chaos will camouflage their crimes. Will any of this scum face justice?
THE REAL ESTATE DEVELOPERS GO BANKRUPT.
ReplyDeleteTHAT'S JUSTICE.
THEY BUILT/RENOMVATED THINKING THEY COULD SELL ATA PROFIT ANDF NOW - AFTER SPENDING BORROWED MONEY - THEY XCAN ONLY SELL ATA LOSS.
THE BUYERS IS IN THE CATBIRD SEAT.
THIS IS NOT GREED.
IT IS THE BUSINESS CYCLE.
TOO MUCH WAS LENT TO TOO MANY REAL ESTATE PROJECTS TO TOO MANY PEOPLE WITH BAD CREDIT - ESPOECIALLY IN THE USA.
IT IS A BUBBLE, AND HARD/HARSH CORRECTION IS THE REMEDY AND THE JUSTICE.
SPECTATORS GET HURT WHEN BUBBLES BURST, BUT SPECTATORS ALSO BENIFIT WHEN THE BUBBLE INFLATES.
GREEDY BAD GUYS ARE NOT THE VILLAIN HERE.
HUMAN NATURE AND LACK OF OVERSIGHT BY BANKS AND IDIOTIC CENTRAL BANKS ALL OVER THE WORLD WHO RAISED RATES FROM 2005-2008.
THEY FEARED INFLATIOM BUT THIS WAS A TRAGIC ERROR.
THIS PLUS THE ENERGY BUBBLE RUINED THINGS.
THE CENTRAL BANKS ARE AT LEAST AS GUILTY AS FANNIE MAE.
SO....
IT ALL COULD HAVE BEEN AVOIDED.
THJAT'S WHAT MAKJES US ANGRY, BUT TAKING THIS ANGER OUT ON WELL-MEANING DEVELOPERS/INVESTORS/BANKS IS WRONG.
THEY ARE GETTING WHAT THEY DESERVE WHEN THEY LOSE MONEY.
I guess you didn't really read my post. My point is many big time speculators - not just in Real Estate - have stripped their companies for good assets and transferred them to new entities, owned by their wives. So while the old company, and the banks, go belly up they still have protected millions for themselves themselves...
ReplyDeleteThe energy bubble didn't ruin things...that was a symptom of greater underlying problems. The commodities markets were responding to overheated demand and acting in their own interests...the central bankers were asleep at the wheel - they should have raised rates drastically when the commodities were out of whack to break the commodity bubble before it sapped the energy consuming nations for 1 trillion dollars! and then they should have lowered rates again...the ECB especially has been totally paralysed. Across the board the markets were overgeared and those with cash are now calling the tune. Banks are now getting getting funds from the Cental Banks for next to nothing - but they are not lending it out - they are waiting to pick up assets at 10 cents on the dollar - or less.
ReplyDeleteLet me explain a scam that was widely used in Denmark. Real Estate speculators set up a ring where they traded assets to eachother, continually increasing the price by 20%. The banks willingly made loans based on these inflated prices and not on the intrinsic value of the buildings. When the real estate bubble bursts - the last guy in line is left holding the bag. He goes bankrupt and thge bank takes a hit. It was a sort of ponzi scheme. Billions were skimmed off. And taxpayers are picking up the bill.
ReplyDeleteSpectators or SPECULATORS?
ReplyDelete