Another American bank falls over and Alan Greenspan of the Federal reserve says it is a 'correction in the market' the like of which happens about every 50 or 100 years. It is the worst correction since the 1929 stock market crash which lead to the Great Depression. In NZ finance companies are toppling over at record rates. Investors have lost millions and house prices have slumped. Is this just what you have to put up with in a free market economy or is it a sign that the free market actually needs some regulation and intervention?
There is a common factor in all of this and its the old deadly sin of greed. It is greed that causes banks to make ridiculous loans to people who can not afford them. Its greed that drives consumer demand for high interest rate returns and high risk investments. Its greed that causes people to speculate on the property market pushing house prices to extraordinary levels. No doubt greed will be a factor as people now seek to take advantage of other peoples misfortunes, in lawyers fees for extended legal battles, mortgagee sales, and further speculation in the property market. Its a high risk game with few winners and lots of losers. Free market capitalism is a natural ally of human greed and for this reason alone we need a third way in the economy that allows for enterpise and industry to be rewarded but greed to be kept in check.
There is a common factor in all of this and its the old deadly sin of greed. It is greed that causes banks to make ridiculous loans to people who can not afford them. Its greed that drives consumer demand for high interest rate returns and high risk investments. Its greed that causes people to speculate on the property market pushing house prices to extraordinary levels. No doubt greed will be a factor as people now seek to take advantage of other peoples misfortunes, in lawyers fees for extended legal battles, mortgagee sales, and further speculation in the property market. Its a high risk game with few winners and lots of losers. Free market capitalism is a natural ally of human greed and for this reason alone we need a third way in the economy that allows for enterpise and industry to be rewarded but greed to be kept in check.
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Agree greed is a key driver of the speculative "investments". But you seem to miss out the individual responsibility of people who aimed too high and borrowed too much then got caught with declining house prices and rising interest rates. Its not just some of the corporates that were greedy.
Far from being an example of Capitalist "greed" the current crisis is an example of the folly of Socialism. As soon as the Democrats gained control of Congress two years ago they advanced legislation forcing lending institutions to begin lending money to people with bad credit ratings. Their argument was that it was a form of "discrimination against the poor" for lending institutions to only lend to those with good credit histories. Many Republicans in Congress tried repeatedly to fend off the present crisis, but the very same Democrats now talking about a "culture of greed" and blaming the market and Bush, prevented them from doing so. The Democrats are now shamelessly re-writing history to cover up the truth that it is they and their socialist ideology which is the true culprit.
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