As aptly said :-
“Elsewhere competition can be substituted for regulation. But in the case of the banking opposite applies-
The greater the competition, the regulation the need for the regulation and supervision.”
This is the main cause for the financial turmoil which hit the United States on 13 September 2008. The Anglo-Saxon unfettered capitalism will be much diminished. The US started frantically spraying dollars by the billions into the financial market in order to avoid the financial meltdown. The financial crisis is caused due to the falling values of the liquidity assets and lack of the liquidity in the market. this has developed into financial crisis with in turn causing the liquidity crunch. Now as we regard the market which has transformed from the bullish form to the bearish? The bear start its roar, and the effect can be easily visualized in the form the bankruptcies of the various baking institutions like Lyman, Freddie, Wachovia, and many others. The US bailout of $700 billion sprayed to the markets in order to avoid economic downturn and to materialize it. The risk of the foreclosures has also averted the market turmoil. US have planned to put the tax and provident money inside the market just to avoid the financial crisis and economic breakdown.
As been said:
“Galbraith saw its coming”.
The Great Depression in 1929, Galbraith said unfettered competitive capitalistic system which is operating pure on FREE MARKET PRINCIPLES was inherently cyclical and unstable, requiring robust regulation and active government. Galbraith and Keynes speculation inevitably leads to the euphoria or over-trading in which rising assets prices encourage speculative excess which causes accumulation the debts. And as in the case of booming, in the period of 2000-07, it sustains low level of cash inflows by issuing new stocks and securities to finance the current liabilities. On the financial slowdown, various organizations that have covered future liabilities by issuing more debts forced to sell their assets to meet their liabilities. The selling of their assets cause assets prices to fall and at a point financial market business with exposure to those collapse. So all the investors try to get their money back in the form of panic- which is the essence of the GREAT CRASH. The history of the crisis events is not so new. In the last tree centuries there were 30 financial crises, which means one crisis in every ten year. Like the following: the TULIP BULB MANIA(1630), SOUTH SEA BUBBLE(1700), MISSISSIPI BUBBLE(18 CENTURY), FLORIDA REAL ESTATE BUBBLE(1920), STOCK MARKET CRASH OR THE GREAT DEPRESSION(1929), STOCK MARKET CRASH(1987), NIKKEI(1991), NASDAQ BUBBLE(2000), AND THE GLOBAL TURMOIL(2008). The common thing about all events are the perceived fundamental change in the economy which causes euphoria and heightened expectation of the returns which leads to excess, fraud and the collapse. Financial crisis is part of the collapse in spending and collapse in spending and undermining financial market.
As has been aptly said:
“Money is not like cars or cups of tea, you cannot test drive or taste it. It depends upon the trust and confidence which cannot be bought and exchanged”
Now looking towards the rescue plan in order to avoid the catastrophe that causes the recent turmoil, the only option left is to underpin core financial institutions. The market is derived by the Scandinavians, the South-Asians and USSR strategy, which had caused the disintegration of the USSR into the Common wealth of the nations. The other is the modern capitalistic, or the Anglo-Saxon Strategy, which is followed in the European and the US. During the turmoil of the Scandinavian economy, it can’t be said that it is safe as the disintegration of the USSR is its result. But the Anglo-Saxon Economy also not fully protected from the market dangers. But one thing which is common is that they both have the rise and the fall, which is the basic nature of the market. So in order to rescue-“BANKING AND THE MONEY”. With this facing meltdown there is need to inject liquidity into the markets. The market needs the cash flows which could be there by Federal reserve intervening and by decreasing the credit- cash ratio(CRR) and the security and liquidity rate. And secondly the strategy of the “cash for trash scheme” i.e. injecting public capital directly into the banks by the purchase of their shares.
So retuning to the rescue plan in order to avoid the financial disaster or the global crisis, the US has injected $1.4 trillion, the UK has $850 billion, Belgium has $93 billion, and Germany has $2000 billion and the Japan injecting $ 235 billion. Surely the ghost of the WALL STREET is still out there. We can just think for the better possibilities which would hedge in the rescue plan.
Abhyudaya Upadhyay
“Elsewhere competition can be substituted for regulation. But in the case of the banking opposite applies-
The greater the competition, the regulation the need for the regulation and supervision.”
This is the main cause for the financial turmoil which hit the United States on 13 September 2008. The Anglo-Saxon unfettered capitalism will be much diminished. The US started frantically spraying dollars by the billions into the financial market in order to avoid the financial meltdown. The financial crisis is caused due to the falling values of the liquidity assets and lack of the liquidity in the market. this has developed into financial crisis with in turn causing the liquidity crunch. Now as we regard the market which has transformed from the bullish form to the bearish? The bear start its roar, and the effect can be easily visualized in the form the bankruptcies of the various baking institutions like Lyman, Freddie, Wachovia, and many others. The US bailout of $700 billion sprayed to the markets in order to avoid economic downturn and to materialize it. The risk of the foreclosures has also averted the market turmoil. US have planned to put the tax and provident money inside the market just to avoid the financial crisis and economic breakdown.
As been said:
“Galbraith saw its coming”.
The Great Depression in 1929, Galbraith said unfettered competitive capitalistic system which is operating pure on FREE MARKET PRINCIPLES was inherently cyclical and unstable, requiring robust regulation and active government. Galbraith and Keynes speculation inevitably leads to the euphoria or over-trading in which rising assets prices encourage speculative excess which causes accumulation the debts. And as in the case of booming, in the period of 2000-07, it sustains low level of cash inflows by issuing new stocks and securities to finance the current liabilities. On the financial slowdown, various organizations that have covered future liabilities by issuing more debts forced to sell their assets to meet their liabilities. The selling of their assets cause assets prices to fall and at a point financial market business with exposure to those collapse. So all the investors try to get their money back in the form of panic- which is the essence of the GREAT CRASH. The history of the crisis events is not so new. In the last tree centuries there were 30 financial crises, which means one crisis in every ten year. Like the following: the TULIP BULB MANIA(1630), SOUTH SEA BUBBLE(1700), MISSISSIPI BUBBLE(18 CENTURY), FLORIDA REAL ESTATE BUBBLE(1920), STOCK MARKET CRASH OR THE GREAT DEPRESSION(1929), STOCK MARKET CRASH(1987), NIKKEI(1991), NASDAQ BUBBLE(2000), AND THE GLOBAL TURMOIL(2008). The common thing about all events are the perceived fundamental change in the economy which causes euphoria and heightened expectation of the returns which leads to excess, fraud and the collapse. Financial crisis is part of the collapse in spending and collapse in spending and undermining financial market.
As has been aptly said:
“Money is not like cars or cups of tea, you cannot test drive or taste it. It depends upon the trust and confidence which cannot be bought and exchanged”
Now looking towards the rescue plan in order to avoid the catastrophe that causes the recent turmoil, the only option left is to underpin core financial institutions. The market is derived by the Scandinavians, the South-Asians and USSR strategy, which had caused the disintegration of the USSR into the Common wealth of the nations. The other is the modern capitalistic, or the Anglo-Saxon Strategy, which is followed in the European and the US. During the turmoil of the Scandinavian economy, it can’t be said that it is safe as the disintegration of the USSR is its result. But the Anglo-Saxon Economy also not fully protected from the market dangers. But one thing which is common is that they both have the rise and the fall, which is the basic nature of the market. So in order to rescue-“BANKING AND THE MONEY”. With this facing meltdown there is need to inject liquidity into the markets. The market needs the cash flows which could be there by Federal reserve intervening and by decreasing the credit- cash ratio(CRR) and the security and liquidity rate. And secondly the strategy of the “cash for trash scheme” i.e. injecting public capital directly into the banks by the purchase of their shares.
So retuning to the rescue plan in order to avoid the financial disaster or the global crisis, the US has injected $1.4 trillion, the UK has $850 billion, Belgium has $93 billion, and Germany has $2000 billion and the Japan injecting $ 235 billion. Surely the ghost of the WALL STREET is still out there. We can just think for the better possibilities which would hedge in the rescue plan.
Abhyudaya Upadhyay
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