The World we are in

So today begins my blog. We live in strange times. A market in freefall, a global economy set to undergo a recession, a generation set to see what real hardship is about and a power hungry government intent on imprinting on us it view of the socialist world.

What does this author think of it all? Totally disgusted. Disgusted at the governments response, furious at the way the current crisis is being reported by the media and worried about the future.

While it is impossible to write down everything regarding the crisis in own post here a couple of things which the reader should take away – who is responsible for this crisis?

Is it the banks who went round lending money (sometimes 125% mortgage value) to people who where already stretching themselves in repaying the loans at low interest rates?

Is it the regulators who where in charge of over seeing the system but had little idea at how CDOs/CDS and all the other kinds of products Wall Street issued worked but refused to acknowledge until it was all too late?

Is it the credit ratings company who were being paid by Wall Street (legally) who went round giving AAA+ ratings to CDOs giving investors a fall sense of security at how secure these products are when in fact they had mispriced the risk on these products.

Is it asset managers/pension funds fault investing in products they had little idea of how they worked but where enticed by the extra yield?

Is it Greenspan’s fault for keeping nominal rates low, so real rates were negative for almost 2 years further fuelling the boom crazed years?

Is the hedge funds fault for promising positive alpha in all kinds of scenarios (boom/bust) and in doing so investing in products they themselves had no idea worked?

Is it the government’s fault who was more than happy to instigate a boom so as to fuel the happy days convinced that this time it would be different (a la Brown…”there will be no return to the days of boom and bust” ).

Is it the borrowers fault for borrowing too much money, convinced that they could make an almost instance profit on the buying and selling of their house (referred to here as “flipping”).

Is it the speculator fault who drove the prices down in markets, by making false rumours and hence instigated a global run on the banks.

Is it the fault of the reporters who kept putting a positive spin on the direction of where the stocks/ house prices would go resulting in private investors again mispricing the risk.

Is it the fault of the bonus system which results in bankers being paid for selling/buying products which blow-up several years after…long after the trader has left and collected his winning….?

Or was it the fault of capitalism, and should we return to a socialist world.

Over the next couple of posts I will try and address some of these issues and in doing so try and offer some solutions where we should go from here. One thing I will say is that the current government (both in the US but particularly in UK) has been totally useless in this crisis and has done nothing until it is too late.

The current crisis in my honest opinion can be blamed on Government, Greenspan (and several other central banks), regulators, ratings agencies, media, and finally the bonus system in investment banks. Over the next couple of posts I will try and point out why I believe the blame to lie of these guys and would welcome feedback from the reader.