As the world economy verges towards some kind of recovery, albeit a fragile one, analysts continue to look back trying to understand why experts didn’t see the signs of crisis in the first place, there remains a lot of questions about exactly what caused the crisis, and more specifically, who is to blame.
We appear to live in a world where blame is thrown around like a tennis ball – a tennis ball that everybody seems to have an allergy to. But the blame has to land somewhere, or at least, there has to be some notion of collective responsibility, and action to ensure that we as a society are prepared for economic crises in the future.
We must stop short of saying however that collective action is the ultimate solution to the crisis. Coordination between countries already existed somewhat beforehand – the problem is however, that some countries were lax on their rules, whilst others changed them altogether, perhaps somewhat provoking the kind of risk-taking conditions that could lead to a crisis, then what would have otherwise occurred in a more risk-averse environment.
But as the world digests what has occurred (and is still going on) since 2007, blame is an unavoidable part of the menu. As the crisis evolves from one that initially started out through record levels of borrowing in the US, inside the rather large bubble of the housing market, with loans characterised as high risk, to a crisis that resulted in massive Keynesian government intervention all over the world, the question is “What next?”
A simple yet accurate way of portraying the crisis to come is “How are governments going to finance their extensive borrowing?” Although ultimately this question is focused towards the United States and United Kingdom, the perilous result of extensive borrowing is all too evident in Greece at the moment of writing. The European Union finally came forward on Thursday 25th March 2010 to offer a package designed to “save” Greece, but the underlining lack of agreement in the Union, as well as questions about its ability to be able to do what it says it is going to do, is highlighted clearly by the fact that the International Monetary Fund is involved. There is no clearer indication that the Eurozone appears unable to manage its own problems – but of course, the whole issue is linked to whether Greece should have entered the Eurozone in the first place.
What is pertinent at this stage is to take stock of just where we’ve been, where we are, and where we’re going. We may examine these stages through the context of the eternal background question of “Who is to blame?”
One may be tempted to blame those who borrowed money in the first place. If ordinary people had been responsible in their personal finances, they might not have found themselves in the dangerous situation of possible default, and the snowball effect of debt that this brings – in many cases, leading to personal bankruptcy. What has happened to us a society? Didn’t we learn from our grandparents and older generations that you only spent what you had? Didn’t we learn that you never “lived beyond your means?” What happened to make us disregard one of the basic laws of personal economics? Did we just become greedy? Did we just want to live now, and not worry about debt because it’s gone when we’re gone? How do we explain individuals’ behaviour?
Sub-prime borrowers would have been classified as such for various reasons. Perhaps they had a bad credit history, or perhaps the hadn’t built sufficient economic connections to be offered a competitive interest rate (as might have been the case for immigrants arriving in the United States) One way or the other, house prices are but a reflection of the overall economic environment, and when there is economic growth, prices rise. This in turn fuels demand for borrowing, with the major motivation for buying to get on the property ladder before it’s too late, or just to make a profit from selling later.
Either way, people wanted to borrow. When times are good, and jobs are generated, there are also more deposits into the financial system in the first place. People feel more secure to borrow, and confident of the future. Who can blame them for that? At the end of the day, choices were made, and consequences have to be followed. The consequences are today, with record foreclosures and levels of personal debt, and consequences shall continue to come.
This is where we might want to introduce the banks into this equation. After all, they fuelled the borrowing by providing it, and low interest rates, although good for demand on the one hand, are not necessarily good for making a long-term profit. For a high return therefore, one must be prepared to take more risks. Were the banks really irresponsible, or just following their business model? With lots of cash available in the financial system, and risk appropriately calculated, what’s the issue?
It seems like one could finish their analysis there, but let’s dig a little deeper. Let’s not forget that banks are not lending their own money to make a profit – but OUR money. And let’s go straight to the point of where the banks must have some liability – securitisation. The supposed financial innovation of packaging sub-prime mortgage debt with lower-risk debt, having it graded as the latter, and selling it to other financial institutions without disclosing the exact content of the debt, calls to mind various adjectives that one could use to describe such behaviour. The subsequent actions of hiding sub-prime debt off-balance sheet brings further colourful descriptions of these financial institutions that are charged with protecting our money and diversifying risk, not storing risk for eventual exposure and collapse.
The final part of this economic crisis equation is governments. They have been accused of deregulating the financial services industry to the point where such innovations such as securitisation were not illegal. Although we can fairly acknowledge that it is one of the responsibilities of government to promote commerce, trade and overall economic development, they also have a responsibility to maintain well-being. If one thing is clear, the fall in world wealth, particularly in the developed world, could not be described as meeting this responsibility – and a certain amount of understatement is needed as one speaks this fact through gritted teeth. So why did the government deregulate and put us all at risk? Is the crisis their fault then?
But governments have two angles that need to be analysed. Deregulation is one, and the other is what has happened as the extent of sub-prime exposure became obvious. Governments, spooked by the massive loss of confidence, particularly between banks themselves, have been desperately trying to save the world economy. The end result at the time of writing is the kind of intervention that socialists could only dream of beforehand. Government intervention is here – and ever-more resources are falling under their control. Is this right in a free-market economy? Is this what Keynes intended when he said that governments should intervene in the economy to stimulate demand?
Not disregarding governments’ motives of wanting to restore confidence and economic growth, as the only sure way to recovery, the consequences of their actions could be to provoke another crisis - a crisis that would not now originate from personal debt, but government debt. Some countries, such as Greece, Spain and Portugal, and increasingly the United Kingdom, are in serious, serious trouble. And it is wrong of people to think that governments have the capacity to solve all problems – the institution of Government has to pay its debts like anyone else. But the same governments are under pressure to not cease public spending – not only because it could be political suicide (Greece, Spain and the UK are all currently ruled by left-wing governments) but also because the act of Government borrowing, ironically, is the only mechanism stopping various economies from slipping back into a serious recession. In other words, increasing debt is supporting government intervention plans with a view to economic growth. And governments are desperately hoping that growth will come – because it is the only real way that debts can be repaid. Fail that, and tax rises and the associated social consequences are all that would be left - anyone else for a dose of IMF medicine?
To close this post therefore, the central substance of its subject remains. Who is to blame for this crisis? Given that governments have stemmed recession only through massive borrowing and cash injections, will growth now come? Will this be enough in the long-term to bring overall public debts down? Finally, how will we prevent such a crisis happening again? These relevant questions all remain for both now and the immediate future. Let’s just hope that these questions still do not exist in their current potent form for our children and grandchildren. So the questions are: “What can we do now?” “What should we have done?” and “What should we go on to do?” Lots of reflection to do, and comments extremely welcome.
Thank you for reading.
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44 comments:
After reading the post, I continued having the same posture of who I think were the guilty persons. I know we must not always be looking for someone to blame for, instead, everyone should try to spend this time thinking what should be done to solve the problem. But maybe knowing who started the problem, the solution could be easier to find. I think that the people asking for money were the mainly causers, because if they couldn’t afford the payment for what they borrowed, why taking that big risk? If they just have money to live an ordinary life, why trying to have more if the most probable thing that can happen is to stay in debt forever? I think this was the problem, people didn’t analyze it correctly. And banks continued lending because that’s how banks work. I wouldn’t blame the banks for mixing the high risk with the lower one, because I think it is part of the system. They won’t give the entire good things to the other banks, and they stay with the bad things, they balance them. Maybe all banks do this…
With the countries lending money, or the government giving money to the banks, I don’t think that the economy will be stable again. Yes, it will help at the beginning, but there is also work for the people to do. The people that own debts should work hard and pay them (it wouldn’t be as fast as we wish, but it is better to receive the money in 10 years than never receiving it back), and the other people continue investing. It can be difficult to trust the banks, but by doing this, the money moves, and more money is generated.
I think that Mexican government should implement that if a bank broke, the major percentage of their money would be given back. I think that if this happen, the people wouldn’t take the money out of the banks so quickly and the banks wouldn’t broke. So, the government wouldn’t pay, I think that this will just create more confidence. This could be a possible solution so that crisis won’t happen again, as well as the banks doing more research in their client’s history, finance records, and jobs.
Now (as I already say), I have the idea that if we continue investing in banks the economy will grow. What we should have done? I think that being more conscious about our currency; don’t spend everything we have, being more responsible. DON’T ASK FOR MONEY IF WE CANNOT AFFORD IT.
The media has to do with this situation also. We are watching TV and hundreds of advertisements come to our screen to offer us great amounts of sales and new products that seems to be the solution to our life. I don’t say is wrong from a company to make some publicity to earn some clients, but it is obvious that in this world there is people who just don’t think before acting, so all the commercials and special offers from company lead people to spent and waste a lot money, and sooner or later they will have to ask for loans. As I said, is not 100% media’s blame, I am just saying that it plays an important role in creating a great and unnecessary consumption. There are millions of people that forgets the rule “don’t spent what you don’t have”.
Moreover, the banks played an important role in this crisis because they gave borrow to any person that asked for one and that lead to the snowball-effect that is mention on the post. For this situation, I will blame the banks for not being precocious, even if the economic situation was well and the future looked good.
It is difficult to blame only one organization when several of them make bad moves, including governments and banks.
But what we must do now is to create a new attitude of consumption, if we don’t need something let’s save that money and spent it in something we will really need it. That is what I learned from this economic situation. In a few decades when this crisis does not exist, I will be able to control my economics better and think what can lead to an economic catastrophe, now let’s pray for all the people to think the same.
1st PART:
I won’t point anyone as guilty. I think we should “blame” all of us. Banks, government, and of course, people; we are the responsible of what is happening. The economic crisis is mainly caused due to our faults.
The main fault of people was and still is, spending or consuming more money or things than what they have, or what they can afford. Now at days, many people like to spend without mattering about their accounts or economic situation; they just spend and buy. This new way of thinking and spending, damages not only the person who spends more; by going to personal bankrupt and owing money to the banks, unfortunately it also damages the banks, the government and the whole economic system. So people are guilty in spending more of what they have and in owing money, due to irresponsibility, to the banks.
With this fault of people, I think, it comes the fault of the bank and of the government. Because of people being in debt with the banks, banks will be in some economic troubles. Bankrupt can happen in any moment, as it happened today. But for me the problem is that banks should not be giving money (credits) to people as that easier. I know they check the accounts or the economic situation of the person that is taking money, in order of knowing if he can pays; but they should implement new rules, eventhough those rules affect the own of money (“the business”) of the bank. Banks need to look in the global economic situation, meaning, that if they are going to borrow, they know how the borrowings will affect the economic system. If it’s bad, do not borrow, it doesn’t matter the business doesn’t run that so well. I think this is what happened in the US, mainly. Banks and real-estate agencies (house sellers) started selling houses and giving credits to people in order to pay them, in such a desperate way, that it was a cause of the global crise, because that people who owed money couldn’t afford it so bankrupts occurred. And as banks, enterprises, cars empires, also broke. All caused because to the debts of people who can’t afford it, and to the borrowings and credits of banks.
2nd part:
<--With the bankrupt of people and banks, comes the fault of the government. Its job is to look for the well-being of the society and country, injecting money to enterprises and banks (saving them) can be a good form of doing it. But what is happening today is that the governments are giving them money, so they can raise; BUT without having it. What I want to mean is that the government is like a bank or like a person, it can also go to bankrupt. We can see examples in Europe with Greece. The International Founds is saving it. But who will save that found or in other cases, who will save and afford the government borrowings?
What governments should do in addition of injecting money to broken banks/enterprises, is to regulate more the loans of banks to people by making extremely strict laws in those terms. Laws that don’t permit dangerous loans and that save us from new crisis.
When we start making REAL regulations to the bank’s system of loaning and to enterprises, GROWTH WILL COME. Cash injection doesn’t help that much, because it’s not a based money (that you can recover it, after spending), it is just money from the wallet. But how will the government recover it? If we have a bad loaning system-that just goes into debts, how will the country's economy make the government recover?
Who is to blame? More than blaming the bank, the government or the person; we should blame our way of thinking of spending more of what we have. As you and my friends said; we are breaking the basic and more important rule that is DON’T SPEND MORE OF WHAT YOU HAVE. That’s the main reason of the ECONOMIC problems, which led to other reasons or consequences, such as, asking more money to banks and then owing it, bankrupts, etc…
To conclude, I like to point that may be the reason of the Economic Crisis it’s not just an economic one, it is also social. What we NEED to do is to change our way of thinking, our social life. The solution is that people, banks and governments start thinking in the well-being of ALL, not only of their self-beings. We have to finish having SELF-interests over the social interests. We have examples that show that having self-interest over social’s let us to crisis. Why? People spending more without mattering of the consequence to economy (Owing money) is HAVING SELF-INTEREST OVER SOCIAL’s. Banks giving loans and loans… just for having business is SELF INTEREST… And governments, well we all know how it works.
The best solution to solve the ECONOMIC system crisis, is not economic, it is a SOCIAL/POLITICAL solution... We need more a social change!
FAULT? I think each one of us has the fault and instead of trying to find the guilty one, we should start looking for solutions and opening our eyes! This crisis have created many problems and while governements are trying to find the guilty ones or trying to find out how many money we have loose people are suffering in the streets because the do not have work and they do not have anything to eat! WE NEED TO LOOK FOR IMMEDIATE SOLUTIONS in the case of Mexico our president instead of loosing time as I wrote you in my blog about crisis should try to find a solution to help all the people who are being affected by this crisis! This crisis helped us open our eyes to many things I do not blame banks they where just lending money and what? that is what banks do! I Think that this crisis should help us to make plans and prevent things like this to happen again, banks should be more careful and also government should implement programs suchs as in Britain that they retur 90% of your money even if the bank broke! This crisis was here to open pur eyes and wake us up of dream! the real world is here and know and the only way to push it up will be together and being concious about what we need to do.
When we have a problem in the world, instead of looking for solutions, first we start to look upon who's to blame, what are their reasons, and let them decide how to resolute the matter in the table. Why? Well, people are programmed to function that way, sometimes it's easier for them to prove their innocence on a problem, than to help others trying to find a solution. Not on only on big economic crises, bad countries situations, etc. but also in problem we deal everyday in our daily life, try to deny it huh?
But anyway, in my opinion I think it's useless to find the ones who are guilty for the problem, because as soon as we find who it is, people are going to lose the interest on the matter, and only to criticize and say "They're not doing anything", because it's their fault, it's their problem. BIG mistake, it's an economic crise people, it's our big problem. So let's forget that part, let's say the we all have a little guilt, what can we do now?, what should we do now? what things are necessary to start biuldinf a solution and make it work?, those are the questions we all have to ask. Banks, governments, etc. yeah, they all had a part in what's happening now, but even if they're not guilty they need to start working on solutions to save their country from falling apart.
But ok, leaving that behind, lets start with this question: What should we have done?, my first thought was: Are you kidding me? that's a question that we could start asking when the problem is ended, what's the point now? First is getting out of the problem, then is learning how to avoid it, for keeping future generations to fall in the same hole. But of course it's just my opinion.
I guess that this isn't just an individual matter, it's exactly the opposite, it's global. So for people who are in power all over the world, they need to unite themselves and work together in order to find solutionas that can stabilize and bring an order to society, and find out a way to finish the problem, even if it's a slow one.
Who is to blame? I think this is a very general question. The economic crisis is like divided in parts where each part has its own guilty. But, after reading this posts and what we have commented in class, I think we are guilty, everyone that has a bank account, everyone that gains and spend money! I blame us because we want the most expensive cell phone which has the same as another one for half the price; it has a camera, gps, google maps, facebook, messenger, etc! We also want everything it is announced by the media just like the widest HD television. It is not to blame rich people who can afford it, it is to blame those who don't pay their debts even their mortgage but they recently bought an enormous Panasonic or Sony HD TV of 3 inches wide. This type of people are responsible for a big part of this crisis. Otherwise, banks are responsible too. They are seeing that these people haven't paid a cent for some months and banks still borrow them more money for their luxuries. But, the bank doesn't offer them the loans, so AGAIN we decided to ask for that loan! Besides that, there is another factor that makes us guilty. We do everything others say us. People start losing confidence on their banks and took their money out from it without knowing the consequences, THEIR IGNORANCE make some banks collapse!
We cannot blame a specific person, we can blame a group of people but we cannot know who they are! Only those people, who didn’t paid their debts and their mortgages and borrowed money from the banks without having money to pay it back, are responsible for this crisis. We don't know who they are, but those people and their conscience know what they caused. This is my opinion, I didn’t include governments because they just want to help the banks and especially us, but to do that they have to borrow money. But if those people who I mentioned before, had not done what they did, governments wouldn’t be borrowing money for this cause.
If our action leaves a positive consequence we feel proud and happy, but when out actions produce negative consecuences we regret, and blame others.
I think the main guilty individuals would be citizens. They estarted the crisis by spending more than what they had. Individuals have not acquired neither practice the value of responsibility. Their behavior is conducted by impulses; this is why they continuously buy and buy and fall into debt; they are not able to control themselves, so they are guided by their wishes and just act impulsively. People borrow ALWAYS: it does not matter for them if they have or no money; they don't think about the future!
And this is what I consider the MAIN CAUSE of the crisis the we are still suffering since 2007.
About blaming the banks, well, I am sure they did not think that their monetary provisions would cause a crisis. However, I think that they did wrong in hiding the sub-prime debt because it could maybe have been solved with the government intervention.
The Government is also blamed, and I do think they have more guilt than banks because I consider the government in charge of managing and regulating the economy; so, if they were seeing that people were spending a lot, and a lot of money was being borrowed, they should have done something to stop it. But they didn't; they even borrowed more money to restore confidence and to generate an "economic growth", but what we obtained was a crisis in which we are stucked. I think they should have never borrowed, but maybe trade or look for ways to stops consumism and get money.
However, the maybe's do not exist; only the present, and our present is a crisis that we need to solve. And maybe it is not that important to found someone to blame, what is the most important is to act for solutions.
I agree with you that collective action is not the best solution. I think that the solution starts inside the country. Each country has a different situation; this is why each of them needs to look for possible solutions. However, they do can make deals or interact to exchange possible ideas.
A possible solution can be also inverting money (not borrowed money; money they get from taxes) in infraestructure because it generates sources of money by the jobs that it would produce, and it also helps develop trading. This way people would be able to get money.
Another solution can be inveting in poor people. Poor people are not able to receive a good education neither to work, so if they are put into work this is equal to pruduction, and production is equal to an increase in the Growth Domestic Product, and that would be reflected in the microeconomy.
Also, the government should lower taxes to poor people and increase taxes to the ones that are able to pay (and force them to pay; including the people working in the government); but we need to stop corruption for this to work.
As a conclusion, I think that the ones to blame are US. We were the ones who started the crisis that we are suffering now. We have become addicted to consumism, so we are not able to stop buying, even though we know that we are not able to pay. Citizens should use their conscience, and see the difficult situation we are passing through and the consecuences that can bring to us and to our future generations. Be responsible of your actions and behavior!! :)
Before I had this class, I only hear of “crisis” everywhere, in the school, the news, my parents, my friends, etc. without having an idea of what was the origin of this famous problem that seem to affect every country in the world. Now that I understand the credit crunch and how financial institutions went downhill and collapsed, I feel more involved in my society because I can develop a new supported judgment and discuss it with the people that surround me. It still surprises me that all that the sub-prime crisis was based on a human feeling: confidence. I think that the loans that people take and the ability of the banks to accept those high-risk loans are part of a consumer attitude that had taken the world and where we can put the “blame” on. Still, it’s not enough to blame, we have to work for solutions together that guarantee us that this won’t happen again. It seems very unlikely to be sure it won’t happen again, but at least we can try. Looking for persons to blame doesn’t get us out of the problem and everyone is affected, so there’s no point there. However, it’s important to see what the mistake was to MAKE SURE we don’t trip with the same rock. It’s all a snowball effect, which starts with a loss of confidence in the banks and ends with a global crisis. People have a smaller purchasing power, so we spend less affecting also businesses and other industries. As an owner of a business, the crisis not only brings economic problems, but also can lead to a decrease in the quality of life. People can suffer from emotional problems by their current economic statuses that lead to health problems. This leaves me with a conclusion of a selfish attitude of wanting more then what we can afford (consumers) and that we still have an interested way of thinking only in making money (producers).
Part 1
The global crisis is a very complicated topic to talk about, as it is to point out who is to blame. While I was reading this post, I confirmed that there is not a single guilty person or a single group of people to blame. Banks, people who asked for loans, government, the consumer culture, and the importance money has nowadays, among others contributed to the development of this global economic crisis. Humans don’t act rationally all the time, as we saw in class. This is very important because it makes these types of crisis really hard to predict. I will now explain why all of the mentioned have a certain guilty or responsibility in this crisis.
First of all, people who asked for loans should not ask for money they are not going to be able of affording later. I know with loans it works differently because you have a certain time, so maybe you cannot pay now but you might, there’s a chance, be able of paying later. I think too many people trusted they will be able of paying but they actually weren’t. Modern culture has a direct influence on human behavior. Nowadays, sadly, we live in a consumer society where money seems to be the most important thing. These people wanted more and more money to get a bigger house or buy more things but they weren’t really thinking the long-term consequences of their expenses. Another factor is financial education. Not everyone in the United States or Mexico has access to financial and economic education. A lot of people get engaged with a credit card without even knowing what the interest rate the bank offers or why they can spend more than what they have at the moment. I think all of us are very lucky because we are studying economics and understanding finances at our age. Even though it may seem really complicated right now, it will be extremely helpful for our future life. I think improving the academic programs in high schools and universities will definitely help prevent a future and worse crisis in the future. Through education, people can be more conscious about their expenses and take better care of money.
Part 2
The banks are also responsible for the crisis. As far as I understood in class, banks are the ones in charge of the flow of money. They are the intermediaries between people that want to save money at the bank and people who want to ask for a loan. Banks gave loans to practically everyone who requested it without getting enough further information about the person. I don’t think governments should intervene at the banks’ choices. Banks should take decisions and handle the risk on their own. Risk is actually a very important word in this relationship, I believe. Banks should revise and determine when they should stop taking risks and play safe. They tried to obtain more profit by taking a higher risk and didn’t know when to stop. They didn’t ratify people could actually pay them back, expecting they will get the money. Giving loans and offering credit cards to college students is an example. College students that do not have a job and a steady income still get credit. I hope people learn their lesson from this crisis and double-check before giving money to anyone. As I’ve mentioned, banks should analyze deeply the risk and do not forget they have something very big to lose.
The government is also guilty in a certain way. Government administers a lot of the country’s money. It should have been more alert and concerned about banks and real-state agencies. It should not impose anything on the banks but they may revise and analyze what is going on at the banks and identify possible negative factors for the economic development of the country. I think it is correct for a government to rescue banks and other important enterprises. According to Keynes, this is the way you can get out of an economic crisis. I think it isn’t really important that this may be considered a socialist measure. The important thing is that it helps restore the economy and people who believe and support free-market should realize this. I think this indicates that free-market economy is probably no longer the best economical system for these times of crisis. Maybe our entire economic system needs to be modified by grabbing different ideas to adjust it to our current situation. Nevertheless, government’s money is not infinite. As the post said, government may also have debts and suffer bankruptcy. Injecting money into the economy will only help temporarily, I agree. But they cannot help forever. I think the government would definitely help economic growth by becoming a more efficient institution. I remember from class that governments are the most inefficient of all institutions. This has to change. Governments should strive for using taxes wiser and doing as much as possible with that money, so their economy can reestablish as well. There have been several cases in European countries where they owe too much money. Mexico has to be very careful with the loans it asks because throughout history we have been affected by unpaid loans.
Part 3
Panic is another important factor in this crisis. It is what made people get their money out of the banks. Again, our unpredictable human behavior affected us more than we imagined. Panic spread easier than in previous crises because of the new technologies of information we have. All of a sudden, the crisis was all the news talked about. I think, in some way, panic made the problem bigger than it actually was at the beginning.
I think that most of the actions or situations that caused the crisis had happened before or had been going on for a while. I think that what caused the crisis was the combination of irresponsible loans, consumer culture, risks from the banks, and so forth, at the same time. All these actions by a lot of different people joined and in a higher degree originated the first stages of this economic crisis we are still striving to overcome and learn what went wrong.
Who is there to blame? Besides reading this article I search for more
information related to the crisis and I found a video on youtube which is this
one: http://www.youtube.com/watch?v=AlnvFKarkYE. This video explains the crisis
in a very comic way, I hope you understand it teacher.
I think a lot of fault is in the Banks for always looking for the one who has
more level of risk in their borrowing. This so called “risky people” are persons
who may have no jobs or incomes whatsoever. They should have known that crisis
was coming, it was kind of obvious, and so they should have looked more into
secure borrowers or recess a bit those loans. After having all the non-paid
loans, the banks decided to sell it to other banks so they would be left without
money. After this crisis was spread through all the world in form of bad
mortgages, this way banks trick other banks. That is why I think bank have a lot
of fault in this issue.
Also we, the people who asked for the money, have a lot of fault. Why do we
always “need” something? Is there a obligation to ask for those kinds of loans.
We have this consumer way of thinking, which is kind of greedy. We always
looking for the next think, always wanting something and never are satisfied. We
keep seeing all kinds of marketing which shows us the “perfect life” which you
obtain if you have it; I think that is not true, money can give some kind of
happiness, but is not the only way.
So I think people have some fault, but banks have even more.
First of all I want to make clear my point of view of whose the blame is. I really think that most of the blame is of the irresponsible citizens who, as the teacher said, were not conscious of the loans that they were asking for. They were asking for loans in order to obtain things that are not necessary at all. People should be aware of what they really have, of what they really need, and of what they consider to be appropriate to ask for. But whatever… what’s done is done and we can do nothing to take time back.
So, what can we do now? In the first place, the society needs to make conscience of its available resources. This includes that people should be aware of their own household and of what they can be able to afford. If they are going to ask a bank for a loan, they must make a commitment and be able to pay back that loan. If we all implement this habit in every person, this kind of problems won’t happen again. Also banks need to take their part. Banks should decide better weather to lend money or not. They should be careful to who and how much they lend. There must be something that supports the applicant.
What should we have done in order to avoid this economic crisis? We all know the answer. Be moderate in the demanding and consumption of goods and services. We must have remembered that we can survive with the essential things without being selfish and egocentric. We show ourselves as egocentric when we do things without thinking first in the consequences for the others, especially future generations. If this economic crisis is not solved rapidly, what would our children or grandchildren be suffering? They will have scarcity in everything, natural resources, economy, technology, etc.
Ultimately, what should we, society and government, go on to do next? I insist: create conscience. The government department should look more intelligent and make clearer and solid solutions. If the government department is not able at all for solving the crisis, it must implement strict standards that force the society to have a moderate ways of living. In times of crisis, society must adapt to the conditions that their government establishes and cooperate with all that is necessary in order to stabilize the country’s economy.
After a big problem like the crisis hits our lives, we always look to know where it got from. I think that's what we've been trying to do ever since we know we are in a crisis; however, it's possible that we may never find someone to actually blame.
The global crisis is a problem that affects all of us, so I don't think that people would have liked that it became such an impacting problem. Of course I can say that this is not one or 2 factor's fault, (like government or banks) because I just don't think that, in the first place, they had thought or planned about a big crisis hitting the economy.
I think that these types of problems appear because there is no awareness of what is going on around the world. We could try to locate the origin of the crisis, but I don't think we can actually blame someone for making it happen; it was more like the consequences of all the actions taken around the world by the different people and governments.
It is true that there are deficiencies in economic systems and governments. I think that the most accurate way to be sure what lead to the crisis, and what we can get to "blame" more as the real cause, is the fact that the several deficiencies in the economic and political systems got together and lead to the big problem. Despite of this, we still cannot assure that the crisis comes directly from these factors because there are not only the economic or political parts affecting, but also the social part.
I believe the individual as itself looks to coexist in big groups of people. Just like we saw in class, humans are directly affected by the way the other people think. So, I believe that we, people, do have a big impact in what caused this crisis. Why? Well, basically the crisis cannot be a crisis if it doesn't affect anyone. So, as we were not prepared for our savings to go down or for our money to be gone; we were making a "hole on the wall" by letting the crisis get through our weak points, and actually make us the real victims of it.
Out of this problem and the ones we have had through time, we can learn what the general things that we are missing are, what we can do in order to fix them and be prepared if another big problem like this one comes again. The current world is concerned about what will happen with their jobs, homes, savings, etc., but if we try to make our way of living more organized, ordered and, really important, if we are actually aware of what's going on around the world, we would know what the future will be like and to what kind of things we will confront ourselves without fearing really bad consequences to come.
At this time we are now living on a very materialistic society, we all want what we watch on TV, a new car, etc. But some things people don’t really need them or they know that theydon’t have the money to afford it, so what we do to obtain those things? We borrow the bank. I really don’t think that when they borrow the bank really think about the consequences that this could provoke, I don’t think this people is thinking that they would have a big doubt that they maybe would not be able to afford it. So, why they are still doing it? Obviously because this is a materialistic world, we want the best clothes, the best cars, etc. But all of this things are just for us, we’re just thinking on ourselves we really don’t reflect on how our debts could affect the entire society.
We know how banks work, and obviously banks would lend the money. It needs it to work.
Confidence in banks has been loosing more and more, so how bank will work if they don’t have the money from other people? They need it, that’s why I think that they need to make something to create confidence.So, people would put their money there.
In all the aspects of society the government is included, because the people that are on the government are citizens like anyone else, so they also spend and spend. Also, they are the ones that in a certain way make the society to obey rules, but if they really make them carry out maybe this would never happened.
The real question is who is to blame? It doesn’t fall only in one person; it falls in the entire society. We’re the guilty ones, because we’re very materialistic and we spend more than what we can afford.
We need to change that way of thinking. People not only have to think in what is better to them also how this can affect the entire society. Our way of thinking is the guilt of this economic crisis.
First of all , I think that WE are the ones to blame for this economic crisis that we are going through, of course everyone is going to say that they do not have any kind of fault for this but every person has part of the blame for this global problem. This should be something that makes all of us think more about the way money should be spent and so that for that future we don’t have this kind of problems or that at least we know how to get out of it in an efficient and faster way than what we are doing now. But why are we looking for someone to blame? We should not waist all this time on thinking who has the fault for the problem we are going through, instead I think we should start looking for better solutions that just raising the prices! This raising of prices are causing that people borrow this large amounts of money from the banks and then they have no way to pay them, I wonder: why borrow those great amounts of money, if there will be no way to pay the bank afterwards? It just does not sound logic to me! Why get yourself in that big and unaffordable debt!? Why take such a risk? Yeah, maybe they wanted to have a lot more money to give themselves a great rich life, but what is the use of that? People just did not think about that enough and just asked for money from the bank as if it the bank had this money trees hidden somewhere! And of course, banks lend the money because that is their job and they thought they would get all their money back and more because of the interests and all those things that they add! But that does not make the banks responsible for this, I mean it was the PEOPLE who asked for the money and it is the PEOPLE who do not have with what to pay them! Now, when the banks have no money to pay the people who go for their money the government sometimes intervenes right? The government gives them the money and all, but then we have the government with no money, borrowing to other countries. And so it goes on and on, but as I said before, who is to blame is not the problem, the problem is: how are we going to solve it?! We really need to start looking for a solution that gives us an immediate response and reassure us that we will have a stable economy for a while ..
If I had to point who is guilty, I would say the people who borrowed too much money, but if i had to point who is to blame I would point the banks right away. I think it's the responsability of every citizen to be responsable for their economics, just as the bank is responsable of their economics. While most citizens don't know the global crisis their actions could cause the bank is quite aware (or should have been) of the global, or at least national, danger those high risk credits were.
However, I think we should not focus too much on the guilties, since most likely ther isn't a legal guilt, and the lession is quite clear (don't give massive high risk credits in a non-caring culture)
What worries me more is about this government's policy of getting out of debts by borrowing more money. It reminds me of an aunt of mine who payed one credit card with another, and that one with another credit card. She eventually got bankrupt by the way.
If government saw thet the problem was borrowing and lending too much money, why do they try ask for the more massive credit in history? I think is quite a paradox.
And more importantly, if governments can't pay, Who are they gonna ask for money next? I think they are risking too much. Maybe they should take (not borrow) money from companies and rich citizens. Just as much as it's possible without taking the companies of poeple down. Maybe this sounds very radical and tyranic, but the crisis affect us all, and if this isn't solved those rich people and comanies might lose their welth anyway, but taking us all down along.
I believe this crisis originated from the lack of information, and yes, I blame all of us. Who is to blame? of corse people who abused of mortgages, they are the ones who originated this crisis in the first place. I also think banks shouldn't had allowed this abusive actions, since they where the ones who gave out all this mortgages regarding the fact people didn't pay back. But why did people did what they did?, because of the lack of information. No one informed them they where doing wrong spending massive quantitives of money they didn't had. It seems no one knew that that obviously had consequences untill this consequences came and they where terrible, untill then they started to realize that they had money, money they don't have now, they had a formal job, a job they don't have now, all because they didn't look forward to see what would happen if this mortgage abuse continued.
Nothing lasts forever, what where these people thinking? Banking institutions should had contacted the press and they should've warned the people that if they kept spening money they don't have crisis will be near and will affect not only you individual but your community. People where so egocentrists, they only thought about themselves, my house, my car, my job, but WHAT ABOUT THE PEOPLE AROUND YOU? they didn't stop to realize will my actions affect society in a bad way? Economy egocentrism is they way I call this crisis. Everyone just did what was good for them, yet they never thought that others might spend the huge amounts of money they did, beating the economy up totally.
I do believe we should work together in this economy, not only the government but including them. We are all to blame, let's end this crisis together, just as we started it.
Thanks to this post I realized something important. We shouldn´t be wasting our efforts in searching who the culprit was, instead we should be looking for solutions.
The crisis is here, it is affecting us so looking for the culprit will not make the problem go away. People tend to do this always, when there is a problem the last person they blame is themselves which proves how selfish we can really be.
Regarding the culprit, is so difficult to know, I personally think it’s a mixture of everyone starting from the sub-prime, to the banks to the government.
And why all this? Greed, people want everything and they will do anything just to get it. We are so affected by capitalism that I don´t think people really know to what extent. I have seen a lot of people buying thing not only they can´t afford but that they don´t really need.
We are selling all kind of worthless things just to get money making seem that you can´t survive without it that we are destroying ourselves. The crisis is fault of everyone and to get out of it we should work together but it is difficult people is still greedy and crisis combined with big natural resources are slowing down our recovery.
I don´t know of a way solution but for the mean time I think that the help of the government is very much welcomed. People should learn from history, that is why they teach it at school I hope that from now own people control their economy better.
It is funny to see how everyone gets so worried about the economic crisis and how they look for whose fault it is. Quoting the analogy that you did about the tennis ball, I’d like to say that it is important to highlight how humans behave according to this. They are desperately trying to look for a guilty person or situation, but they are totally afraid of knowing it might have been because of them.
Economics, being a social science, is very hard to predict or to analyse. During the events that led to the crisis multiple things intervened, it’s not like the whole guilt can be put on one specific thing. The attitude that we used during the process before the crisis is one of the most significant ones. Borrowing money and not being sure if we can pay it back was the attitude that humans took and led them to where they are now.
The question is: what do we do now? Well, this is a question that has been in the heads of many for a long time. I think we should think about what we were doing right before the crisis started, and begin to let the money flow again. It will be a slow process, but is logic that if we want the process of the banks work, we need to be part of it. We need to trust banks again and save our money, so they can borrow it to other banks and to people who can pay it. Therefore, the money will be flowing. As you say in our classes, everything is interconnected and we cannot be out of it, we need to participate.
The guilt cannot be put in one specific situation. This is why your equation is simple to understand. The banks, us, and the government have certain responsibility in the crisis. We know now that we have the tools to solve it, it’s just a matter of waiting to see the results.
A crisis that is affecting ALL of us, who is to blame?
all the elements of the "equation" caused this problem, so every element has to be responsible for the cosequences.
every element made something different that kind of mixed with another element's action and created this crisis that is affecting all of us in the same way, so it doesn't matter what was the mistake that each element did, everybody is paying with the same coin.
So, what's next? I've always considered that every responsible and good action starts in the person, so the first thing that has be done to avoid a crisis is the individual decision: every person HAS to be responsible for his or her actions, so, we have to thik before we act; we all know that, so, let's practice it. We cannot be living of loans and more loans that at the end we won't be able to pay back, and OF COURSE, our debt won't be gone when we go; let's think about our relatives because they will be the ones that will have to pay for our mistakes.
Banks, on the other hand, had learned the lesson, well.. I hope so, It is easy to think that everybody is responsible, that all the people are going to pay back, and the bank will be receiving more, but the bank has to think more about the fact that the money that is borrowing belongs to US.
Government, as John M. Kaynes said, has to make intervetions to avoid recession.
last, I consider that the best way to avoid this situation, is not doing the mistakes we did last time, because now that we know the consequences and nobody wants a crisis again.
Every person has to put a granito de arena to improve the situation.
Who’s to blame? A question that is very difficult to answer. But why is it difficult to answer? To me there is no single person or entity to blame for the economic crisis. It is a situation we brought on ourselves and truly a situation that we deserved. Guilt is composed of many areas that somehow took part in creating this economic crisis. It is true that finding who to point our finger at is not necessarily the most important thing, but as we know, it will most certainly help us in finding a new way to make economy rebound without making the same mistakes we did.
In part, the fault belongs to everyone mentioned in the blog post. We as money borrowers have to be concious of the decisions we make and how we affect others. It is obvious that if we borrow money we cannot pay, we should not be borrowing it. That has to do with education and how materialistic we’ve become, we would do anything to get a bigger and better house even if we cannot pay for it. We as citiziens of a country should thing deeper than what happens to our own economy, we should be aware of what we are doing to our whole contries’ economy.
The banks themselves took part in their own demise. Giving credits to people who cannot pay for them is not a very smart thing to do, much less if your going to pass the damage to someone else who’s not aware of how dangerous it is what you did. Lending money to people to make more profit is not right, it shows how greed and irresponsible banks have become. Making packages with low-risk people and sub-primes and securitising them is not very nice. Securitisation is very complex to me, but as I understand it it has a great deal of blame. To me, banks have to be more responsible in what they do to avoid another crisis. It is imperative that securitisation with sub-primes is disclosed openly and that they do not hide the sub-primes with low-risk borrowers.
Last but not least are governments. They have to be very aware of what happens in the economic side of their country. It is a very dangerous thing to leave banks be and not regulating what they do. The government has to be present in how banks run, if not intervene at least be awere of what goes on with their peoples money. Securitisation hast to be regulated deeply so banks don’t repeat what they did. Now governments are borrowing from other countries to come out of the economic crisis, it is fair that they do this but they have to be very careful. It is important for governments to know when to stop, how much money will be needed to grow and how much money will be repaid when growth comes.
From my poing of view it is not a matter of who to blame as it is a matter of what to blame. Greed and materialism have become part of the global culture and are practiced every day by many people. We want a lot of the best we can find, and that is not cheap. Spending money we don’t have, lending money that will not be repaid and doing so in a not regulated environment most definetly will lead to a crisis. We have to be careful and humble on the decitions we make, think of others and know what the repercussions to our actions are.
“Those who believe that money can do anything would do anything for money” -Voltaire
Well, it's true that in bad situations we always try to find someone to blame, I may say is because we want to know obviously who is the responsible and then prevent in that area happen again.
I consider that the one that have the fault are all of us, a little bit more the banks, but generally speaking, all of us are responsible of this crisis. They animate people to live better, buy more things, live above our possibilities.
It is truly amazing how it initially started in the U.S, with borrowings, the housing market, with high risk loans to a massive crisis all over the world, and as is sometimes said, if the U.S. has a cold Mexico gets pneumonia; meaning the impact of this first world country.
Another really important matter is how governments (countries) think are going to pay all the debt they are accumulating and are extensively borrowing too?!!..
I blamed all of us because we all were part of this crisis in a way or another... Banks on the first place, because with their propaganda of consumption thrown to people, they incited people to get houses by credits with high interests and then spreading the subprime mortgages to all over the world by the “globalization”; making the problem bigger. They should take responsibility for what they are doing, and choose for stop providing (lending) and work in a safe way.
But also people, for falling in their traps and games, for not being strong enough to hold themselves and live beyond their means, it basic knowledge in life! If I buy something with money that I don’t have with credit or anything like that, how am I going to pay it later? An obviously will cover a debt but also an interest that will increase my debt. That mentality and behaviour of greedy, and being uninterested consumer will lead us to personal bankruptcy and financial problems that bring our world down, because is wrong to do it.
The system itself is wrong, when there is economic growth prices rise, making more people to borrow money in order to satisfy their unnecessary wants to fit in this society they have modelled.
Governments should be more aware of their situations and work to make sure to bring back confidence, find way to recover and have as their main goal the economic growth.
As you wrote Mestro John Read: Increasing debt is supporting government intervention plans with a view to economic growth.
But that is not to rely neither the right solution. We're sinking every time more. What we should do is really understand the problem and look around a solution that really helps.
Although governments have stemmed recession through massive borrowing and cash injection growth isn’t going to come yet, we must quit that risk taking condition and be stricter with the laws.
The most important thing is to learn from our mistakes, and change our way of thinking. We should be aware for the consequences each time we make a decision, and not just think in ourselves but also in our familiar, country and global level (be more responsible). The reason I find to find the guilty for the crisis is this one, don’t commit it again.
Do we really need to know who did it?, or to blame someone? I think blaming someone is going for the easy way because maybe knowing who did it or who started the crisis, it would be easier to start working on the problem to get it solve it faster. Even when that is the easy way to solve the problem, I don’t think we should be blaming someone. But think about this: the people, who asked for the money (I mean the borrowers) weren’t able to pay back, were they? And if they knew they would not be able to pay the money back why did they ask for it? They could get the money other ways; I mean why would they make their lives more complicated? They knew that asking for the money will put them in a big debt. I can’t blame them because they really needed the money but they should think better before doing something!. I think other people will blame the banks or the bankers because the mixed the high risk with the lower ones but I don’t think we can really blame them for it because of that. Why? Because mixing that is part of the system they were prepared for, the things the company taught them. But what I really think , is that banks should study more carefully the people they are lending money because if they study their economic situation they would be able to notice they will not be able to pay and that the bank should not lend them money. And for the people… IF YOU ARE NOT GOING TO BE ABLE TO PAY BACK, DO NOT ASK FOR IT!. So, again I need to say that I’m in a neutral position because even when all of this little things were problems, I can’t blame anyone.. or..should we blame everyone?.. I mean every single person did something wrong?.. I don’t know if everyone did something… that’s why I’m in a neutral position; there is no one to blame.
People always search to blame someone for something, while the only thing they should focus on is whether for a solution than for a punishment. We should stop searching for who to blame, because this will only make the conflict a lot more worse than what it is already and focus more on a solution.
Why do I think we shouldn’t try to blame someone?
I think all of us have a part to blame on this issue, but since nobody recognizes that they are wrong, even for the simplest thing ever like, borrowing money from the bank to buy a penthouse, then they search for someone. Government is to blame, because they didn’t protect people firstly on over consumption and borrowing too much too; Banks are to blame, because they were giving money they didn’t have to people; and people are to blame, because they were spending a lot more than what they had and didn’t watched out for its self economy.
Yes, we are to blame, but we shouldn’t just sit down and admit it, we should take action on this issue. We should spend less and buy only things we really need, propose economic regulation laws, consumption laws, laws that watches over our consumption but first of all, we should think and stop being greedy and selfish.
This blog post at the beginning says that there are still doubts about how the crisis started, and that everyone is trying to find someone to blame. I think governments shouldn’t be blaming others, even when it says “blame is an unavoidable part of the menu”, enough is enough, what I mean is that governments should focus, maybe not what the cause was because they aren’t certain about it, but the things they did that could have been part of the whole problem.
One of the problems is the excessive borrowing. This is a problem because they can’t pay back. These are all problems that we could have probably avoided, but as individuals, or as sub-primes, we didn’t think much about what was going to happen, we thought about what we wanted now and in the early future, which already passed and went right through a future in crisis.
Then there are the banks. Banks take risks, they borrow money that others save, and borrowers don’t always pay back. That is what they do, but the problem is when they can’t give their money back to savers. So I think a part of the blame also goes to them, because there should be a point where they stop at taking risks before it becomes too much to handle.
Finally there are the governments, which I think have the minor part of the blame, they could have predicted it, or maybe done something before, but now they are the ones left to put us out of the crisis and it is impossible. They have to look at so many factors that could lead us out of it but take us to another crisis in the future. And what is left for us to do, is spend as less as we can, we don’t have infinite money nor does the country.
I will turn 30 before we are able to blame somebody. We could blame the banks for borrowing money without thinking of the consequences. We could blame the people who asked for that money and didn't pay it back. As you said, why can't people be happy with what they have and spend no more than what they own? I think it isn’t about blaming somebody, what is important is to do something about it. Looking for a culprit is only a loose of time. It will be nice to find out whose fault is and that that person or group of people did something to solve the problem, but that won’t happen. Finding a culprit won’t make a difference; we need to be together in this and work really hard in order to make the difference. Blaming somebody is a bad habit that we all humans have and it is a sign of cowardice, irresponsibility and immaturity. Lets break the habit! Everybody should make responsible of this problem because I think the crisis is not fault of one o 10 people, I think is fault of everybody.
As I said before, we need to work together in order to solve this problem. First of all, the people who have debts with the bank should pay them. The bank should give them facilities for them to be able to pay back that money. The government will play an important role; I think the government of every nation should do something. They need to create opportunities for people to work and to increase their economy. Countries that were not that affected very much could help other countries by lending money or something. People need to stop thinking only in their own economy; people should stop thinking in being rich. What is really important right know is in being stable. We as individuals need to really work hard, start saving and stop spending money In unnecessary luxuries.
I've thought several times who was the fault of? but if we really analyzed it we can see that now whose fault was it is not really important (for the solution) but is could be important so we wont make the same mistakes on the future, qe should really learn from our mistakes, and I personlly think that it is our fault in the first place because I think that the first decisions that lead to this were ours, because as Mr. John said we should have learned through time and from our ancestors that you cannot afore to spend more that what we win that's just mathematically impossible, in the second place I think that banks being an "intelligent" association should have cared a little bit more about who they were giving our money to, because for intance you know that if someone (just for say a number) wins $100 cannot afore to pay a loan of $1'000,000 it is just non logical. And I think that it is really humanistic or something just really common on expected from human that when we see that times are good we want to eat the world we think that it will always be that way and that everything will always remain the same but, when we see hard times coming we just think that they will pass.
And as I commented at the beggining this is a culture problem I think, we are used to be in debt all the time, we are so used to be spending what we don't have jet and then when things don't turn out to be how we expected we just freak out, and I think that's exactly what happened, and this crisis is mostly our fault, our lack of consiousness and our lack of responsiblity.
PART1
It is undeniable that all of the elements mentioned in the discussed blog played an important role in the development and course of the crisis. People, banks and governments all together contributed to the fall in world wealth. But if you ask me to blame it on someone that started it, I surely would say people. Why? Because banks were actually following their business model! They were calculating risks and moreover diversifying risks for them not to keep them all and have a potential collapse. Governments were also following the capitalist economic model that we have chosen for these times, and I think they actually have done a great job when trying to recover us with the cash injections in the system. I won’t say governments are perfect, of course they have a lot of issues, but I think they are following what Keynes intended when he said governments should intervene in the economy to stimulate demand.
So I’ve come to blame all of them but if we have to say WHO STARTED IT I’ll say that especially ordinary people. I think that it's obvious that people shouldn’t spend more than they have. It’s just stupid and reckless to think the way most Americans (not only them but mainly) did. The economic time was perfect for them to ask for such big amounts of credits but I think the transformation of values from generation to generation had a strong impact in his topic.
PART 2
I’ve stated that in my opinion people and their irresponsibility started it, but I won’t exclude the banks and the governments from this problem. I believe that banks should’ve done something to prevent people from freaking out and take their money away from the banks they had saved it in (like they did after they heard of Northern Rock Bank). They should have also predicted what the behavior would be and prepare for it, not just sit with arms crossed and watch how their companies collapsed. They were well prepared when talking about sub-prime borrowers risks and everything but they lacked a vision that could take in account everything that surrounds an institution with the importance they had. They should’ve known that the world’s economy had its bases on them! So, even though people and their lack of values started the problem, banks were the ones who let the issue continue and get worse. But for me, this is something we should all learn from and perhaps we still don’t have the answer of how it should’ve been done but we can now analyze and let experts decide what will be the best alternative for a future in which the same situation could repeat. As an optimist I think that from this mistake we’ll learn something extremely useful for our later economy (if it doesn’t collapse again with the possible government debts, which is the next thing I’ll talk about).
I really hadn’t given much thought about it until I read this blog, but it’s absolutely logical! How much more cash injections will our governments afford to do without getting into a huge debt? I mean, are they seriously analyzing what the consequences of their moves will be or are just they thinking in saving our world’s wealth at this moment and deal later with what will come? I don’t actually think that they are that stupid, but with the economic problems that for example Greece has, it wouldn’t surprise me to see the European Union (in their optimistic attempts to save Greece) in a difficult position in the future. I hope the economists of each country are efficient enough to cope with these difficult decisions and think not only in today but in tomorrow, and the day after tomorrow. About what you, teacher, asked in your post, I think that of course the governments are right to intervene that much right now, although we’re supposed to have a free market economy; I think free market economies don’t exist, they are just utopian ideals because taxes and that kind of governments' interventions will always exist.
As a conclusion I think people started the crisis, banks let it happen and continue growing, and governments have done nothing but trying to save our irresponsible actions. I do believe their decisions will take us if not to an economic growth at least to an economic stability after these terrible years. What we should do to prevent a crisis like this is learn that we can’t, as normal people, base our lives in money we don’t have and spent imaginary things. We should also diversify our risks just like banks do (supposedly). We should have MORE INFORMATION and inform other people as well about how the problem was originated because remember that doubt is only planted if we’re ignorant.
Well to start I still have this question, Who is to blame? I don’t think one or another is guilty about this, but I actually think the three of them are part of the problem because if just one would do things correctly, then things would happened differently or they could even avoid that problem. I think they could make it not that bad; for example the banks (I don’t know what was going through their minds when they borrowed all that money to high-risk people, even if they know that they were not going to pay.) I think if they had thought it twice and don’t give them that money, they’ll save a lot of money. Or even people, if they had been conscious about their money; I think they wouldn’t ask for money to the banks.
Another thing that I think they did wrong is the fact that the U.S. banks mixed all types of debts (they mixed the high-risk debts with the low-risk people) and they sold them to another banks, from other countries without telling them that the percentage of those debts was a combination of those.
To avoid all these problems, I think that the government should intervene in its economic process and they, I think, should inject some money to make the money flow to speed it up. And in order to avoid future economic crisis, the government, the borrowers and the banks should be aware of all the economic process and don’t commit the same errors they committed.
To begin with, we persons have the ideology of blaming in someone if something happens wrong. Nevertheless, in this critical situation, its all our fault. We should not blame on the government, banks or persons but, who has more guilt, definetley is we as a society and our materialistic ideology. People sometimes try to project something that it is not and they do it just to fit in society. Spending money that you don't have or asking loans and realizing that you cannot pay them back, could be mainly the big problem of the economic crisis because leaving behind all the government “fault”, we were asking for money that was not ours. In the other hand, I trully still don’t understand why the bank borrowed a huge quantity of money to persons knowing that the money borrowed wouldn’t come back to their hands ever again. I agree that the government should inject and intervene in the economy of the free market in order to prevent another fail. And as I commented at the beginning, what is tragical and dissapointing is the irresponsability that we society took for spending money that we didn’t have and not returning the money borrowed. Moreover, we society have learned through 3 this tree years that spending money to buy a new high definition television or a new pretty hause with money that we don’t have, can cause a serious world wide issue. We should not only think in ourselves because we trully affect others only seeking what is the best for us. In other words, the economic crisis fault, is mainly caused by our irrational behavior and our cumpulsive thinking of always having more and more.
Who’s to blame is a pretty interesting question with several answers. In my opinion, we and the governments are to blame. Currently, the globe is in a very complicated position, not only in the economic side, but also other social and political problems. So the crisis has come to make all this mess a more exciting. But, let me explain my point of view. First of all, I think we have the fault. Even though we know the reasons of past crises and all the problems they caused, we do not learn. But, why? I think that our culture can explain it. The ugly truth is that America does not save, while most countries in the eastern part of the globe are taught to save money and spend only what they have. This occurs because America has always been seen as a fertile land with endless resources. That is why Europe conquered us. So we acquired that mentality, which was fed with certain historical events, such as the US winning World War I. Since then, America has spent immeasurably. On the other hand, Eastern countries such as China are taught to save money. And we can appreciate that in the middle of this mess: China is one of the least affected countries by the crisis.
And, what about the government? Ah. This is interesting; the government has not helped at all. With increasing taxes but not wages, prices are going higher and higher. Maybe government is just as confident as us; overall, they are American too. In Mexico, we are managed by a free market economy, and government does not intervene directly on economy. However, as Keynes said, there is an invisible hand that sometimes helps; sometimes we just wish it would not exist. However, what should be done now is to make the hand bring more business, jobs, smart politicians… And how can we do that? Probably, if we could stop this attitude everything will be easier. Nevertheless, that cannot be done so quickly. But that is one of the solutions: Since the government seems to do nothing, we must start ourselves.
What have we gotten ourselves into? How did we fall into crisis so rapidly? Well as you already know the economic crisis started when many banks loaned money for houses to people who eventually could afford paying back the money they were led. So what happened next? Millions of people lost their jobs and houses. This has turned into a global issue because this has involved many banks from all over the globe. Do we have a solution? What can we do about? Well in recommendation of many professionals, they give us 4 options: give liquidy to banks, give capital to bank, stave off nationalization, and stop contagion.
Well, I believe the fault is on everyone. Of course the banks are the first to be guilty, for giving too much money and houses to people what could pay back. But then when you think about it, the fault goes to all those “not so smart” people that ask to borrow money that they can’t pay back, when you ask for something you should be sure that you will return it, it’s part of being an ethical person. So with this everyone approaches to the government, which obviously doesn’t have all the answers. So what do we end up with? A global issue. The governments are doing their best in finding solution for the crisis. But the damage is already made. Many investigators are trying to find the people guilty behind this chaos, but it’s truly useless, the damage is already made and there is no way back.
I think its very obious of who the fault is, why? i think that the guilty of this mess was the bank, for wanting more than money, so they dind think about the councequences of borrowing money to high risk people. But not only the bank, but the people, as an individual you have to know to control your self, if you dont have money to buy something you should not buy it, people should have this culture, to know when to stop. But not only the people and the banks, the goverment was also guity on this mess, why? because i think the goverment should be working together with the bank in the first place, so crisis like this would not occur.Apart from being searching for a guilty person in this whole mess i think we should be doing something to save the millions of jobs, companies, countries, ect. Many people was affected from this crisis, for example i read while i was doing a research in this subjet, that they said if USA had a cold , we get a pneumony. This crisis should help us see our mistakes, because its all about culture, apart from economy if we keep staying with this culture we have, we are going to ruin everything, like our planet for example. So basically i think the primary guilty, is the people's culture.
When I read the article I noticed that they were trying to find someone or an institution that was guilty about the economic crisis. But I always think that the people who are responsible of those kinds of things are ourselves because a lot of people are trying or want a life that they can’t have because they do not have the money. The government may have some of guilty about this topic, because they didn’t noticed that the economy was going down and needed to get it up for the best of their country. Maybe the banks are another guilty of this crisis, because all the banks should have some record about how much money they have and if they have funds. People are probably the most guilty in this case, because they think that money and material things are going to give them some kind of happiness, but the truth is that you should led other people or the things that are in vogue, you should fell comfortable about your thinks and be happy with them. And just do not have bills because when a crisis appears and you have a lot of bills the bills immediately will go up and you will never be the same again in the way of stability of the economy.
As i read the post many things were going through my head , from anger to liability.
The question that everyone in the world are making at this point is who was at fault? reasons it happened this? why anyone warned about this? I think all was our fault , it is our responsability to be moderate in spending and not exceed , everything in excess is bad. No need to blame if the culprits are ourselves , now underside of worry stress , not nowing what to do we must act and move forward , we are machines that have endured such great things like this throughout our history , because don't do it now? and how can we not fall in the conditions in the future to which we hold today, i think the saying "you learn from mistakes" fits very well in these circunstances , the human race is not so stupid to fall back to a mistake we made in the past , nos i think we should meditate and think what can we do to remedy this problem? i think one solution would be to change our culture of wanting more and more and be more moderate and patient persons and think before doing things , be more responsible and find happiness in not only material but in what surrounds us , our family , our friends , nature , etc...
We must change our selfish culture and think of others , work together as one and toward achieving our goal of happiness.
The ECONOMIC CRISIS
The world is constantly changing and we can’t understand and know the way people are going to change. As for example with global warming scientists can make statistics but they don’t gave an exact start point. Humans always try to blame each other but we need to create a group responsibility.
The economic crisis started since 2007 ( I thought that the economic crisis started in the year 2008 or 2009, but it started after). All the countries that borrow money to the more powerful ones that are creating a big debt that is accumulating. This means that for example Mexico is suffering a lot because if they borrow to the USA money, well USA is in crisis so Mexico is in a worse situation.
While economic crisis is going on, we can see that the blame isn’t only for a collective responsibility; but also as individuals we need to see that we are getting stuck in our finances. Every day we are making more bests and borrows. This produce bankrupt to many organizations and industries.
Society doesn’t have the culture of saving money, they spend what they have and they also want even more. We as humans think that debts are going to be during our lives but they will finish when we died. But this is completely wrong.
In the other hand we can find the banks. In my opinion I think that they don’t have the blame because they are only following a model. They are saving only the 10% of our money and the other part they lend it to other people with debts. Finally they get the money again by all the interests they ask for.
Now, going to another topic that is the government. In my opinion, I think that in part this crisis depends on the wasting money that the government is making, but in other part the society has also a big fault because we as a democracy don’t know how to manage money.
In conclusion I don’t know to whom is the final blame, but I can realize that government has a bigger fault, why? Because they are wasting money and creating debts that are affecting our economy even more than the consequences that society is presenting.
The Economic Crisis: Who is to blame?
It is true that we are always trying to find someone responsible for each action made in this world but most of the time people turn around because they do not want to be the ones to blame for the action committed.
I find this crisis to be much more than that. This problem if not only because of one person or a small collection of people, it a whole cycle caused by several groups in diverse places. This starts with the banks and the people who borrow money from those banks. Not all the people who borrow money from the banks are people that will pay back, there are also high risk people which the bank approves for them to borrow money, also giving them a high interest in case they do not pay back. This affects all the people who do pay and the people who are saving their money in that bank, because it’s not the banks money that they are lending it is the people’s money, that is how banks lose money and the crisis is created.
On another hand government are also included in this cycle, because they are in charge of commerce, economic trading and our well-being. I think that it is right that they step in once in a while when it is necessary like know, to be able to save banks they need to inject money in the system, but the problem might later occur when the government themselves create a new crisis and then will have no were to turn.
Maybe were are all to blame, but then we must all help recover our economy, a way to start recession of the crisis could be to lower taxes and create jobs, that way people will have more money to pay back the banks and buy more things which will the economic growth.
The crisis has been a very popular problem since it began; it is a little obvious because it affected a lot of countries around the world. The title of the blog I read is “The Economic Crisis: Who is to blame?”, and by reading this I think that there not a specific culprit, but thousands. I think we should blame the irresponsible conscience or attitude of all the borrowers who didn’t make their payments on time, because of this fact the flow of money became slower. Things like this made the savers to lose their confidence and wanting to retrieve their money and cause and even worst situation for some banks, which at the end collapsed in few days. Also we could blame the banks for giving so many loans without having control over them.
I don’t like the idea of being looking for someone to blame, instead of that we should be trying to look for solutions for this global problem, and we can’t depend on the government because we are not sure if the government would be able to find the solution. There are a lot of countries suffering because of this crisis, and we must help them. I understand that if we find the real culprit, we could prevent any other similar situation like the one we are passing through today. But anyway, it is more important to find solutions instead of looking for someone to blame. I still don’t understand why this happened, I mean, didn’t we learned something from the last great crisis? Well, during times of crises the societies must be together and help each other because union is strength, and maybe then we should be able to solve any problem.
Who to balme?-The HW
I think it is an interesting topic because we are always blaming the government for everything and the economic crisis is not the exception to the rule.
Regularly I hear people in the radio or in the restaurants talking about the economic crises, that the economy this and the economy that, and they always blame our government for it. But then I think, who is it responsible for it? I think that to be able to answer the question we first need to know how banks work.
We know that a bank works basically by winning the trust and confidence of people, and that if one of these is broken very bad things can occur, like for example leading us to an economic crisis. Like the example that we saw were a bank had declare that they were not going to be able to keep lending money, up to this point everything was completely fine with the bank. Later after that announcement the people started too freaked out and started to withdrawal all their money at the same time all of their money from banks. Because of this the blanks started to run out of money c cause in theory they have the money but since they invested that money the banks weren´t able to give back to all people all of their money, leading to an economic crises.
And who is it that because of one bank the rest started to fall apart? Well, because of the paranoia that the people had and because as we know banks borrow money from other banks.
Therefore I think that the ones that should be blamed is us, cause at the end we are the ones that in first place started to stop paying our mortgages and the ones that were withdrawing all the money from the banks. Maybe if banks could have predicted people’s behavior they would never had made those announcements and the money from the banks would have never been withdrawal.
by-Lourdes Salas 958031
CARLOS ESTEBAN MONTEVERDE MAZON
The Economic Crisis: Who is it to blame?
I live in a country that has been in debt for many years now; and what it seems to be a temporary solution (borrowing more money) it only makes it worse. There are, of course, countries that are seeing how their economies are improving a little bit with the creation of programs that affect directly the population. But what is going on in Mexico? Instead of creating programs to help the poor, and the homeless, the government increases taxes. This “solution” makes it impossible for thousands of families who now have to pay higher taxes leaving them a misery salary. Many people decide to cross to the United States looking for the American dream. I must say that these people don’t have the money to obtain a visa or they are scared by not being accepted to obtain a visa, so they cross illegally and they risk their lives so they can have a better job, life and future or at least that’s what they think.
Now, what about personal finances? Does that count? Part of the blame that has lead to an economic crisis worldwide is the lack of administration many individuals or families have. As the article mentions, years ago the people only spent what they had; nowadays, people spend their salaries in debt and interest that make the problem bigger. It is very easy in these days to obtain a credit in a department store, in a supermarket, and many families accept this and in the beginning it seems they have it under control but many times interests “eat” them in a blink of eyes. Here the only beneficiaries are the ones that give the credits, not the people. This kind of problem is another sign that there is crisis in a family, community and country. When a family doesn’t have the enough resources to buy basic things, like food and paying for services, there’s something wrong. I think one of the answers to the original question is lack of information about credits, and poor personal finances. If this is multiplied by many other families, the result will be an apparent economic crisis. There’s nothing wrong in wanting a better life, and wanting things, I mean, that’s why people work hard all day long, to be able to make it every day. And yes, I believe financial institutions are in part responsible for this since they are the ones that approved the credit.
In a country like ours, it is very hard for many people to be paying taxes for everything. We pay taxes for the house we live, for the car we have, for food we buy. How is it possible that Mexico faces such financial crisis when everyone pays these amounts of money? We live in a very expensive country and the government doesn’t do anything to solve this problem. On the contrary, here the rich get richer and the poor get poorer. Many people complain about those exaggerate salaries that government people have and the amount of money spent in politics. If part of this resource was put into the creation of programs to aid people, I’m almost sure that we wouldn’t people suffering poverty.
It is ok to have a good salary; after all, that’s why people study for many years, to get a nice, well-paid job. Maybe the solution to solve many financial problems is education. If people decide to study more, and many more people worry about having a career from a university, the level of life would increase. The problem is, what about the people that don’t have access to education because they all the family has to work or because they live in a rural area? These people only dream of their kids going to a university, but while this happen, they have to do whatever they can to live by day.
So I guess the one to blame about the crisis is the government itself. The government spends a lot of time debating about non-important things, and how good or bad they will look if they take certain actions. Political parties only rule for laws that make the financial problems worse and this makes it part of a world economic crisis.
CARLOS ESTEBAN MONTEVERDE MAZON (PART II)
I agree with Frida Osorio Pacheco because she clearly said that we are blaming so many things when the causers of all this is us, because we created and we are the solution. She also comment that the countries or the government lending money it’s not the solution and I agree with her, but sometimes we need to lend money when people don’t even have a peso to buy some stuff at the oxxos and by doing this people is in debt but I think it’s a necessary cycle but I think it can be a solution by lending money and not get in debt so much people, its sounds illogical but it can happen.
Enrique Martinez Montoya said the banks had the fault because they just wanted more money and more power that they started to give credits to people that didn’t have money and this guys said OH I can borrow money to the banks to live like a rich, but when do you see a rich paying a debt monthly or weekly, I had a friend in Monterrey that has a really expensive car but here comes to sad part, that he doesn’t have enough space to park his car. What I’m trying to say is that people cares about showing off when they know they don’t have the opportunity.
Livier Hernandez commented that now after reading the post , she can now discuss and talk about this topics but I think that why people does not advanced , because they only talk about crisis and credit crunch but we don’t act , that’s the real problems we created (humans) so we need to destroy it and keep going , what I’m trying to say is that we only talk about it , we hear it every day in news , parents ,friend and a lot of people but we barely act , we need to get involved to the institutions that are fighting with crisis and all this stuff.
Luis Enrique Aguilar Araoz commented really good I enjoy reading his comment , he talked about the risky people , this are people that does not create money , but the bank just for getting more money the lend to this people , how they wait to get pay when they lend money to people that doesn’t have job. I think that the system of lending money will be o.k. if people use the money in a good way I mean using the money in the things they really need and not in things that get them into more debt. I know some people that need to still money or sell drugs just to pay some debt. Do we really need to end up like this? This is a good topic.
Andrea Acuna said that we people have panic, I think we have panic, saying crisis is like saying Voldemort in Harry Potter, we don’t need to get in panic, we need to act, we need to make important decisions, we need to start creating more money, like my father say, The money is out there you just need to make the money change of hands. A lot of people have kill themselves because they thought the crisis will be the end of the world , but it’s a think that happened we can’t do something about crisis but just keep going and not being trapped by the society.
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