jueves, 20 de noviembre de 2008

THE GLOBAL FINANCIAL CRISIS: THE DEATH OF CAPITALISM (I)

The world scenario is changing. We are living a historical moment, that as in many other occasions, is not perceived in the very moment in which it is happening.

Let's try to take a look to the facts. What has happened in the last years?..apparently we had a good life. Our cash flows seemed to be indefenitely sustainable, or even they seemed to grow along the years, and with it we were able to have a better life having better houses, betteer cars, better technolgy, etc...with all this our life seemed to be easier, and it seemed to improved continuosly. And all that was possible thanks to an indefinite amount of credit.

Bit by bit, the crisis scenario was starting to appear. The banks were stopping the credit slowly. ¿Why was it so?..more or less one year ago it begun to appear in the news that the markets were having lack of liquiditu, lack of cash-flow. The subprime mortgages market (literally, mortgages for people that can not pay them) was failing in the United States. But in europe all governments spreaded the message of calm: "That's a domestic problem of the States. That's not a problem of Europe". So, we continued our life, as if nothing was happening. We were in a kind of dream, of spell, created by our governments, but also allowed my each one of ourselves.


Some months later, the news woke us up saying that European Markets were out of cash-flow, and the European Central Bank and other institutions like the Federal Reserve of the United States and the Central Bank of Japan was injecting cash flow, but as a exceptional and unique situation. According to the newspapers, it was not related with the subprime crisis of USA, so... again we fell down in the dream. Nothing happens!!... everything was ok!!... this is not affecting my daily life, isn't it?....


However, it was affecting. And the effects were more and more perceptible: Real Estate prices falling down as a need for selling; Real Estate operators decreasing income dramatically; and the banks, much more cautious, were stopping the credit; But even then, the governments still said: "There is no crisis"...In Spain, the prime minister was accusing anyone who talked about crisis of being "non-patriotic". Pathetic, but real. And after the summer, in just one week, we change from a non-crisis scenario, to the biggest crisis of the last hundred years, in words of some economics ministers of Europe. How is it possible that we all were so sounding asleep?.. this is my main concern. We all have behave like being "economic zombies".

So, now, trying to solve the problems (or perhaps making them worst... let's see) the main governments of the world meet in Washington. They say they are going to re-define the "financial architecture" of the world. This is a very sound expression, but what does it mean exactly??..... does someone know???....

They say it is a crisis of the financial model. And most of the people, that don't understand on Economics (and don't have to....) is asking to themselves: What in the hell is the "financial model"? Why the "financial model" is provoking that my company is firing me?..Why the "financial model" must be repaired with near 800.000 million dollars, that we all are paying to the banks, that have been having profit for years, while I'm not able to pay my bills in the end of every month?

To be continued.....