I’m not sure whether “looming” is the right word to describe the ongoing financial crisis because the fact is in many parts and fields in the world the impacts of the crisis have already taken place. The closest examples are what have happened to my friends who work in Engineering Procurement and Contruction (EPC) industries, some of them have already been laid off by the employers due to project uncertainty which triggered by the liquidity crisis.
If I were to identify the root cause of the ongoing crisis, then I would say “Greed” is what behind the crisis. Greed lead the financial institutions to lend money to non credit worthy property debtors that triggered the subprime mortgage in United States. Greed lead some investment institution, like Madoff, to fraud investors money and triggered the liquidity crisis because some of the investors were Banks who used cash belong to their clients in the investment. And the liquidity crisis is worsen because the clients then lost their trust and rushing to get their money back from the bank. No working capital can be provided by the Bank to keep the economic wheel rolling and no cash can be provided to finance the existing projects. Lay off, increasing unemployement rate and economic slowdown then unavoidable…
While greed is inherent human behavior or attitude, then it’s impossible to ask human not to be greedy. What should have been prevailed is the government to provide strict regulation and control to avoid this human inherent behavior from taking over and screwing up everything. It’s widely known that even ilegal conduct like short selling is common in our stock market and that notorius conduct has taken part in bubbling the stock market/economy.
Now, the biggest economy in the world -United States- has collapsed and it drags our contry into the same crisis because US has been our dominant trade partner for years– too late to diversify….
Don’t we have anyone with forward looking in our Government? Why do we have to get into the same hole twice…Indonesia…Indonesia…aaaarrrggghhh
