The man in the street is bewildered that he has to bear the cross for the sins committed by the few greedy. The problems in financial institutions arose out of greed and excesses of the few and lack of oversight by the authorities to control and nip the problems in the bud. What started as a trickle soon became a torrent, as many were allowed to get away for long. The housing bubble led to collapse in values of securities tied to real estate pricing. The chain reaction from the subprime mortgage crisis spread across the globe threatening the world financial system. Great maneuvering and concerted actions by governments have kept the lid in place, with simmering issues that still threaten to blow-up anytime.
America and Europe have been badly hit and it is no more business as usual. The crisis has hit the common man whose social security and pension systems are under threat. It is clear that globalization has also played its part, with the rug pulled under the feet of many prosperous western democracies. China opened its economy thirty years ago and took to globalization like duck to water. They used the benefit of a top-down system to its full advantage; with a single minded focus to get ahead. The biggest irony was they enforced rule of law against their working class, clearly favoring the capitalists! No stoppages of work were tolerated and the whole system geared to pamper the investors but with rules and regulations to favor their country. These included transfer of technology to the local production centers. And the big corporations had no choice, as the market was just too tempting.
The Pied Piper of Hamelin effect is still in full cry as big businesses see China as the biggest market for products like cars and consumable goods. And with reserves of over two and half trillion dollars, and still counting; who will not want to partake in the party? Whole industries are getting sucked-in, upping the ante by the day! The music is too tempting and the dance continues in the din!
The globalization effect is in full force; what started as good business to the advanced countries is turning sour for their common man. Though benefiting through cheaper products mass produced and imported from mainly China, it has resulted in hollowing-out the manufacturing industries at home and the resultant unemployment. One cannot blame China as long as they play by the rules; now that is also in question, but competitive devaluations are used to get even, when others failed!
But the real tipping effect for the financial crisis was mostly internal, and the cascading effect on global financial institutions, resulting in bailouts running into trillions of dollars. Sadly, the needed system overhaul to bring the excesses under control is resisted by vested interests as the bottom line in major financial institutions is boosted by currency and derivative product speculations. The old-fashioned banking business of accepting deposits and lending for productive purposes do not give the added oomph to their bottom lines!
It is becoming clear that, not only do we need enabling legislations to react to the new realities of globalization, but also enforcement of rule of law to punish the guilty and nip the excesses in the bud. The best brains are into speculation that assures quick returns to the institutions, and high rewards to them in turn. But the lack of oversight and rule of law passes the buck to the common man, who is just a spectator in the whole process. Globalization process could be beyond his ability to control, except in expecting fair play by all, but the risk of excesses, bankrupting the treasury, is clearly of real concern, as fruits of his labor dissipate into thin air. Democratic systems have to fine tune to face the new realities than react and put out the fires. The biggest crisis since the Great Depression of the 1930s is still raging after three years, without the clear resolve of leaders to rise to the occasion. The rise of China is a game changer, as wealth has shifted to them, with no clear signs that western countries are up to meeting the challenges with a clear strategy. Democracies without the rule of law, and getting it up to speed to face the new challenges, will fight for survival in the long term. It is no more business as usual when the fire-spitting dragon means business and has upped the bar by many notches! The common man expects his leaders to rise to the challenges than pass the buck of their failures to him. Basic justice should be served for those at the bottom of society, who live by basic values of hard work and thrift.