FINANCE and Generational changes WHY NOW

[burt]

Hi,
Finally I decided to open a new topic (If John agree) special for the following subjects (not to share anger, but to try to put together facts with different professionnels):

- Europe, the actual crisis, it's impact, why now?

- Corrupted banks, not for philosophical remarks but for facts and answer the question Why now?
(There are a lot of remarks on that subjetc in the different blogs, I open the sub-subject here, just to speak about the changes and try to think why now),
For exemple why such an awful amount of derivatives (please go to the B.I.S. site and take the exemple of what is an option (see wiki) to understand the awful risk we are swiming upon (even if a risk is a risk, not reality) with 700 Trillion $ of derivatives and it looks like that banks lend to the government which lend to the banks (vicious circle), so why is

- The media and their magic use of words like "crisis", why so much emphasis on words, we are very close from a "financial systemic crisis" (see Wiki for the definition), not into it, and we are in the middle of an economic crisis, the 2 concepts (finance and economy have to be distinguish, the fact that EVERYONE seems looking at the Dow to know the future of the economy is a VERY bad idea, because it creates a future WTHOUT concrete reality)

I'll continue the list (or suppress point of the list) with the remarks of other readers

Regards to all

[burt]

Hi,
I'll begin with Europe (because I'm european, a true one with a family spread to all over Europe)

The actual crisis is strange to me, but not unusual, what hurts me is the communication errors and why these errors look to have so much consequence today.
Europe has strictly no knowledge on communication, and never had, but I'm getting hurt by the fact that they don't try to improve.
We are going to see, within the next months, if the govermentS prefer to act and not to speak.

The facts:
- After Dubaï the Greek question arised very early, and at the end of 2009, everybody knew that Greece had a terrible problem to solve.

- it took 6 months of "deny the problem" attitude and suddenly the politicians were afraid and took only verbal decision (even for the €750 Billion bailout, which was sold to the people as "virtual money no to be used", and even if, on my knowledge Slovakia hasn't approved yet (I'm not fully sure, this has to be checked))
(very bad communication system)

- instead of sitting in face of the problem (is there a governance of the Euro?), politicians prefered to make the Market their God

- Now I can read
"Spain is a country that is solvent, solid and strong, with international credibility," said its Prime Minister, Jose Luis Rodriguez Zapatero. The European Commission spokesman said: "I can firmly deny [that a Spanish rescue is under discussion]. I can say that that story is rubbish."

This is really stupid communication, they keep their eyes focused on the God Market, in the silly hope of not having tu use the €750 Billion fund they created, and instead of understanding that their attitude (each country has to answer) keeps the people anxious.
None cares any more if Spain is solvent or not, this is NOT the question, the only question seems to be "Is there a captain on board?" (and only one after God).
This is the kind of communication you find within small children at school, ending with a fight and nothing else. The only solution is to cope with the reality, giving the right to answer only to one person (why not Trichet?) and stop speaking to say nothing,
(and people anxious about lending to Europe IS a reality, facts AND feelings are both part of the reality)

Or there is a problem OR there is NO problem,
** If there is a problem,the Europe as a whole has to face it, and create a real inter-country governance of the Euro (today it is only words, in 6 months it could happen, because Europe in ONLY reactive, NEVER pro-active, so don't say that the world is finished, it is too early to know)
** OR there is NO problem, and it won't hurt to generate immediatly the 750 Billion Euro bailout, to lend money to who needs it and then (in a few years) take back the money to "sterilize it" (easy to do if it is done with the correct rules towards the banks, laws and people with the correct knowledge are available to do it).

NOBODY CARES ABOUT THE WORDS OF THE GOD MARKET, REALITY ONLY COUNTS

So my question to everybody is "Why now?", why suddenly are people so anxious to have an immediate answer to long terme questions?
Why so bad communication which, in istelf, creates the problem that it tries to solve (like children in the school yards)?

(as in the US, everyone doesn't like anymore Obama because he is not God, as a non-american I have no right to have ANY opinion about Obama, but the stress put on him by the media is out of proportion)

It looks like being a generational change driven by fears (and fears, not managed, means war or civil war, even if in Europe, neither war neithe real civil war is in the scope of the next 5 years: there are still too many people alive and afraid by the WWI and II).

What I observe, but this is not new, and John made the same observation: In the actual world, the political power (democratic or not) is locked in a "speak, but do nothing" attitude. Can it hold?

Any comment (specialy on mass psychology)??

[Morgan]

I think you both have explained the causes of the financial crisis in Europe effectively and the arguments used in the article are logical and sound. It explains the controversial nature of the recent steps that have been taken by the government to make the financial system more stable and reliable to attract investors and foreign trade.

[Warfield]

Hi,
Financial crisis in europe effectively and the arguments used in the article are logical and sound. It explains the controversial nature of the recent steps, that have been taken by the government to make the financial system more stable.

[OLD1953]

It's really more of a generational appetite for risk that changes. Risky investments are always there, they just don't dominate the economy until you get a general attitude of "it's other people's money, I'll take huge risks with it and reap huge rewards, but if I lose, it's nothing out of my pocket". Of course, if you misrepresent the actual risk of an investment to investors, you can go to jail, but if the risk vendor sees nobody going to jail and no books being examined and nobody is minding the store, then they accept the risk of jail as a minimal added risk factor.