Thursday, October 21, 2010

Global Financial Crisis - who is the guilty party?

Every failure gives us a golden opportunity to learn what went wrong and improve our systems.

Global Financial Crisis was a failure of the financial system on a global scale. Unfortunately while we all suffered from the crisis, our leaders are depriving us of the golden opportunity that the crisis has presented to us in return for our suffering. So they are robing us twice.


Because they are the guilty party.

Here is some analysis to support that view:

From The Wall Street Journal:

How Government Created the Financial Crisis

The classic explanation of financial crises is that they are caused by excesses — frequently monetary excesses — which lead to a boom and an inevitable bust. This crisis was no different: A housing boom followed by a bust led to defaults, the implosion of mortgages and mortgage-related securities at financial institutions, and resulting financial turmoil.

…Other government actions were at play: The government-sponsored enterprises Fannie Mae and Freddie Mac were encouraged to expand and buy mortgage-backed securities, including those formed with the risky subprime mortgages.

Government action also helped prolong the crisis. Consider that the financial crisis became acute on Aug. 9 and 10, 2007, when money-market interest rates rose dramatically. Interest rate spreads, such as the difference between three-month and overnight interbank loans, jumped to unprecedented levels.

Yes, it is the mismanagement of the financial system by central banks, not the free market that brought about the failure. It is government's responsibility.

The Global Financial Crisis events were unfolding exactly like events from Ayn Rand's book Atlas Shrugged.

This is why the book is becoming more popular:

Ayn Rand and the Financial Crisis:

In this time of financial crisis and the Democrats' irrational response to it, Americans are showing a growing interest in Objectivism, the philosophy of Ayn Rand. Increasing sales of her masterpiece, Atlas Shrugged, have been reported around the United States.

“One of the methods used by statists to destroy capitalism consists in establishing controls that tie a given industry hand and foot, making it unable to solve its problems, then declaring that freedom has failed and stronger controls are necessary.” —Ayn Rand, 1975

That is exactly what happened to the financial industry.

Are our leaders out to destroy our freedom and enslave us all under the pretense that free market (and therefore personal freedom) has failed? I hope not. I am certainly not the one to believe in conspiracy theories.

On the other hand our leaders have done this once in the 1917 Russia...are we witnessing an attempt to repeat this history? I sincerely hope not.

However, in order for that history not to be repeated itself, there need to be more voices in defense of personal freedom. This is why I started this blog. I love freedom. Freedom has my voice.

It is about time our leaders acknowledged the failure and shared the benefits of that golden opportunity with all of us.

Thank you for reading. I hope you find the links posted here useful. Feel free to comment and follow my blog.

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