Here we go again, Dow plunges

[Diomedes1976]

I blame two things


One ,too much liberty on the financial economy.In a world where nearly everything is regulated (exportations ,importations ,liberty of people to live in foreign countries ) the "new " neo-liberal economy wanted the financial economy to be absolutely free.The financial economy is mostly a speculative one ,if you let it loose it can incur in great risks to have their ever increasing profits.

Two ,the greed of the system to get ever increasing profits.If you have a good enterprise with good sales the directives are always pressed by the shareholders to get a 3-4% more next year.It doesnt matter how ,they must do it if they want to keep their millionary job.That pushes the directives of the enterprises in a determinate path.Cut costs (many times firing people or lowering the quality of the product) ,take risks ,search new markets....there isnt a infinite number of new markets to access ,and if all the enterprises do the same to their employees(freeze wages,fire some of them) then theres less customers in the market so your own market shrinks...then you dont know what happens and do the only thing they know ....more cost reduction and firing people.

In a macroeconomic scale I think the problem has just burst but has been 10 years in the making.To get ever increasing consumption from customers and in a wide number of things (leisure,insurances,cars,homes,etc) the capitalist system has used the financial economy to provide the money.In a way they are bringing tomorrows money to the current day to support the massive spending ....the problem is that A)Banks dont have that kind of money and have incurred in financiery engineering to give it out incurring in great debts by doing soB)Sooner or later the people are endebted and cant ask for more money because they couldnt pay the monthly fees and interests of the debt.What happens then ...a massive crack.

Finally the banks business is to give money to people and take back the money with interest .....in the current philosophy of ever growing profits it was clear they would be tempted to loan more and more money ....its their business after all.Once the "safe " loans have been secured they had to keep growing ....so they entered the unsafe loans as the subprime mortgages.