Human Nature

The world wide credit crunch busted out over a year ago and was, in economical sense, upending the global financial market. It led to a collapse in the financial, investing and homeowner sectors of the United States and which then spread worldwide. Looking at such advanced nations, should we not wonder, why it is that the financial crisis is actually happening?

Why has no one listened to these people who actually predicted what is happening?
Robert Schiller, an economist who had already precisely forecasted the stock market collapse in 2001, foresaw that home prices in the United States would fall to that extent that global financial markets would be affected by it, was only among a handful of other US economists who forecasted scenarios close to what is actually happening. Maybe the small numbers of “prophets” is a reason why no one has or wanted to listen, but then should we not wonder why there were so few?

Why have people been unethical in their action and why did no one stop them?
The significance this situation created was that after the financial system lowered their interest rates to one percent in 2001 investors would not invest anymore. To keep up the incoming profits, mortgages were sold to the financial system who sold these back to investors. After everyone, qualified for mortgages, was a house owner, they started to give out sub-prime mortgages to keep profits flowing in. Not surprisingly, these new homeowners could not complete their monthly payments which put more houses on the market than there was demand, and which ended in low value houses that nobody wants or can afford anymore.
Here, managements driven by the pursue of wealth and bad skills in risk management put their hands in this area to keep profits growing. To answer, why no one stopped them, is simply because they did not do anything illegal. They created legally a disaster without proper forecast. We sincerely hope they have been now downgraded to mortgage brokers.


And finally, why a recession is likely to happen again. It is obvious, at least since the crisis, that country’s economies have been globalized. Travel, trade, tourism, cross boarder supply created new markets, new companies, new customers. Unfortunately, politics remain on national level which can develop into a policy clutter. This mix, of economic dependents and political disparity, led and will lead again to financial disasters, especially when we look at the rapid growth of nations in the last decades. Without better international policy agreements who can keep up entire global progress?

To sum up, the global financial crisis happened because there were not enough economists who predicted what will happen, because business people tried to increase their capital with immoral methods and because the world is economical connected but political differently.
It can be concluded that there are developing backgrounds which led to the global collapse but no reasonable answers on why people let it happen. One could cite a late music icon who pasted during this global matter, "If they say 'Why, why?' Tell’em that its human nature."