Bursting the Business Bubble
Bursting the Business Bubble
The web of the global economy, at the center of which lies the United States, is affected by each vibration of even the most picayunish strand. Much like a real spider’s web, al threads, notwithstanding their size, affect the frequency at which the web quivers. When a superpower such as the United States falters, the entire structure collapses. In 2008, this is precisely what happened when the fiber surrounding the housing market was stretched past its breaking point. The Occupy Wall Street movement of 2011 was ignited in part by the American financial crisis of 2008, the course of which was elaborated upon in the documentary Inside Job.
As Inside Job clearly outlines, corruption in the economic system of America is easy to spot even with minimal investigation. Policies established in the Nixon era and lasting through the following forty years have produced a laissez-faire economy where the largest corporations have the most say not only in the economy, but also in the government. Without regulations, inspections, or investigations being imposed on these companies, they were free to do whatever they wished with absolutely no consequences. This freedom, of course, opened a Pandora’s Box of greed and corruption. When left to its own devices, the baking system dissolved into chaos and immorality.
This deregulation was caused in part by the inability of regulators to “keep up” with the ever-changing system of derivatives. These derivatives are unlike any other, more concrete economic transactions, in that there is no shift in property, so the individual betting on the derivative does not actually own a portion of the baser good. Derivates do, however, allow risk related prices to be transferred from one party to another. During the 2000s, derivatives became increasingly popular and companies began speculating both for and against derivates sold by their competition much in the way they handled credit default swaps.
The web of the global economy, at the center of which lies the United States, is affected by each vibration of even the most picayunish strand. Much like a real spider’s web, al threads, notwithstanding their size, affect the frequency at which the web quivers. When a superpower such as the United States falters, the entire structure collapses. In 2008, this is precisely what happened when the fiber surrounding the housing market was stretched past its breaking point. The Occupy Wall Street movement of 2011 was ignited in part by the American financial crisis of 2008, the course of which was elaborated upon in the documentary Inside Job.
As Inside Job clearly outlines, corruption in the economic system of America is easy to spot even with minimal investigation. Policies established in the Nixon era and lasting through the following forty years have produced a laissez-faire economy where the largest corporations have the most say not only in the economy, but also in the government. Without regulations, inspections, or investigations being imposed on these companies, they were free to do whatever they wished with absolutely no consequences. This freedom, of course, opened a Pandora’s Box of greed and corruption. When left to its own devices, the baking system dissolved into chaos and immorality.
This deregulation was caused in part by the inability of regulators to “keep up” with the ever-changing system of derivatives. These derivatives are unlike any other, more concrete economic transactions, in that there is no shift in property, so the individual betting on the derivative does not actually own a portion of the baser good. Derivates do, however, allow risk related prices to be transferred from one party to another. During the 2000s, derivatives became increasingly popular and companies began speculating both for and against derivates sold by their competition much in the way they handled credit default swaps.