The one thing that is on everyone’s lips is the talk about the global financial crisis. The subject dominates conversations in coffee shops to taverns. It is the intellectuals to the school drop outs; everyone has a theory and an opinion about it. How I wished the fund managers and financial advisors had talked and analysed it as much as the general public are doing now!
I was invariably a part of this conversation a few days back. I was sitting there and trying to make sense of all the financial jargon that sprung up like jacks in boxes all around me. I should say that it overwhelmed me pretty badly and left me struck by lightning. I could not make too much sense of all the numerical bombardment. But who should be blamed? The self proclaimed smarties that had held top decision making posts in banks? Or the greedy investment firms occupying expensive real estate in New York City, who think they set financial trends for everyone to follow? Or is it the average dude on the road with no job trying to buy holiday homes?
We were then living in good times. Oil was cheap and people had a lot more to spend. Everyone had extra cash to spend and people were happy. But then, the greed to acquire more kicked in. So the banks came up with this brilliant idea of stated income, verified assets (SIVA) where in where in one has to just state his income and not to bother about proving it and he is sanctioned a loan. Then another bank came up with No income, verified assets (NIVA) where one need not have any income at all, but will still manage to get a loan. Believe me guys, I could relate to SIVA and let it pass by being ultra liberal with my internal ethical instincts, but NIVA was totally unacceptable. But then some Ivy League MBA comes up with the idea of No Income, No Assets (NINA). You don’t have to have job, nor the need to have any assets. Yeah! Who else would like to take a loan would you ask?
What is the logic behind these schemes? Put a person under an obligation he cannot fulfil, promise him a better life and charge him the sky for the loan. Now every bank knew that this was a risky affair. So they sliced up the risks and packaged it to look like a very safe investment with a nexus with credit rating agencies. So the big boys on Wall Street decided to buy these “investments” thinking that it would generate revenue. The insurance companies did not want be left out of the bandwagon. The big boys insured all these so called dream investments with them and the insurance companies were more happy to do so. Higher premiums! All they eventually did was buy liabilities that were labelled as profit making means. The bubble eventually burst and the rest is history.
But one startling revelation here is that all these financial institutions dared to gamble with the money of the people who trusted them to safeguard it. The heads and directors made a fortune while the average investor is left in lurch.
The greed to have everything for oneself has led these people to make decisions that were eventually detrimental to global economics. And the world is left in jitters because a handful of individuals played a dirty unethical game. Fed by this sentiment of material pleasures, the guy next door goes absolutely beyond his financial means to lead a life of luxury and splurge. So everyone has his part in this broth gone wrong. The root cause for all this mess is human greed and I reckon you will agree with me. Greed was a human emotion that was underestimated isn’t it? Well, it’s hard not to recognise it now!
