Creative Commons License
Where the stuff on this blog is something i created it is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License so there are no requirements to attribute - but if you want to mention me as the source that would be nice :¬)

Saturday, 26 November 2011

the financial problems explained in 250 words

don't recall where i got this image - happy to credit or remove
we learnt (or were taught) to want to have more stuff

the stuff we wanted became like fashion  - changing frequently

so we all personally borrowed more money to afford all this stuff

at the same time we gradually got more connected virtually (via the internet)

which relied on us being the product

yet increasingly we were less connected in reality (less community)

meanwhile our governments reflected our borrowing behaviours

and so financed much of the stuff they wanted (on our behalf) via borrowing

sadly at the same time

the financial sector invented increasingly clever ways of lending money to others

so clever that nobody really knew who held the risk if somebody defaulted on their borrowings*

and at the same time the rewards to individuals in the financial sector for doing so rocketed (and shareholders didn’t call them to account)

so people and governments who wanted more got loans to get more

and then the glitch came – some people who had borrowed the money could not repay it

nobody knew which banks were most at risk from such bad loans due to the complexity*

so governments got worried and guaranteed the banks wouldn’t fail (capitalism irony)

the bank problem became a sovereign debt problem

and now governments quake as the market hikes their lending rates

so we all wait to hear who will take the loss from loans that will never be repayed

-          shareholders of the institutions that lent money to the wrong people?

-          or tax payers?

No comments:

Post a Comment