Studies of Roots Global Financial Crisis

The global financial crisis that occurred in the United States has led to the economic slump that is in the U.S. economy. The financial crisis that originated from the subprime mortgage crisis was weakening some U.S. financial institutions. For the financial giant Lehman Brothers could collapse. In fact he was not alone, another giant business also suffer the same tragic, such as Washington Mutual Bank. Largest insurance companies in the world of American International Group (AIG) and the giant securities firm Merrill Lynch, Morgan Stanley and Goldman Sachs have tremendous stumbling. The U.S. government was forced to take over over these companies. Investors began to lose confidence, so that stock prices in major bourses were falling out of the worlds.

There are a lot of analysis related to the collapse of financial markets, ranging from U.S. deficit policy, low interest rate policy in the Greenspan era, the greed of political elites, the speculative activities of the company officials, as does Dick Fuld, CEO Lehman Brothers, the high cost of foreign policy programs, manipulation financial report and others. Almost all of the analysis is not dip to the root of most of the problems, so that any drug and recovery strategy that would not be efficacious. Disease crisis and would continue to recur over and over

Kinds of Financial Crisis

Global Financial Crisis can be distinguished to two kinds of crises, the first crisis in capital markets (capital market) and the two crises in financial markets (money market). Both forms of financial market was opened up opportunities to deal with a high level of speculation. Both use the flower as an instrument. They also separate the monetary sector and real sector as the economic system of capitalism taught.

In the conventional capital market, it is possible occurrence of short selling and margin trading. Business activity is very heavy with speculation motive. While in the money market, there are two big mistakes that resulted in the crisis, first, foreign currency transactions motivated speculation, either spot or not, such as forward, options and swaps transaction. Second that the international financial standards is fiat money.

Manajamen experts worldwide, Peter Drucker, referring to the symptoms of an imbalance between the monetary flow and the flow of goods / services as a decopling, the disjuncture between the widespread phenomenon of the flow of money (monetary) to the flow of goods and services.

Imbalance phenomenon was triggered by rampant speculation on the second business financial markets above, namely in the capital market and foreign exchange markets (money market) so that infected the world economy called bubble economy (bubble economy). Called economic bubble, because it looks great physically, but it does not contain nothing but air. When stabbed, he was empty. So, bublle economy is an economy in which large quantities of monetary calculation, but not balanced by the real sector.