Sunday, October 23, 2011
Overdose: The Next Financial Crisis
This is an interesting documentary on how bad government policies with respect to the current recession could trigger a bigger financial crisis in the future. It talks about how fall in consumer spending after 9/11 leading to more spending by the government lead to the housing bubble, which in turn led to the current financial recession. The documentary claims that western governments, especially the US are making the same mistake again, which could trigger an even bigger crisis in future. This is partly due to drastic not-so-insightful measures by the government and also due to the "too big to fail" attitude that many large institutions in the nation have. It will be interesting to wait and watch what is in store for us in future!
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I'm not sure I'm too excited about a prospect for another economic crisis as it seems we still are feeling the effects of the last one.
ReplyDeleteThe government, in any nation, is a problem. They are too heavily influenced by those same big companies that their efforts to regulate are terribly inefficient.
I think the number one thing that must be figured out in big picture is to reduce the ability of companies to contribute money to politicians. It's ridiculous that the U.S. laws allow so much contributions knowing full well that that money comes with many strings attached. We cannot have politicians under the influence of donors, we need politicians under the influence of voters.
I don't think we need to worry about the current US spending causing a financial crisis as currently there is little, if any confidence in the market leading to a decrease in private investments. Whereas in the post 9/11 markets the confidence was regained immediately leading to soaring investments hence inflationary pressure ultimately resulting in the financial bubble.
ReplyDeleteIts very interesting to see the connections between each one of the causes the author suggests that led to the 2008 financial crisis. It would seem that these issues are unrelated yet they seem to piece together the reason for the crisis. Whether or not the author's argument is true or not is inconsequential. The thing I am interested in seeing is whether past economic recessions had similar key factors that led to their respected crises.
ReplyDeleteLobbying and political campaign donations are a huge problem in the U.S. Companies spend millions of dollars to keep legislation that will hurt them from passing. I agree that we should cut the amount of money businesses are able to contribute or maybe set up an intermediary group that can receive funds and distribute them impartially. Kind of far fetched i know but something like that would be nice.
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