The Foreclosure Crisis and Tremors Across the Globe

October 21st, 2008 | Tags: Foreclosure Crisis

To understand the foreclosure crisis and its resultant tremors across the globe it is necessary to understand why this crisis happened.

The general impulse is to blame the multinationals that used global economy to fatten their calves as the villain of the piece. Others say that the bailing out of the collapsing financial bodies with public funds as smacking of Soviet type of state capitalism. Both theories are incomplete.

Globalization was not introduced by the multinationals. It was technology that did it and business houses took quick advantage of this to net heavy profits. National capitalism soon transformed itself into global capitalism. The scope of business dealings came to be vastly increased. Change in quantity led to a change in quality. A new and more dangerous type of capitalism made its debut.

Some of the jumbo multinationals had budgets in excess of those of their governments. They now began to exert untold pressure on the administration. The big media joined hands to lend their global voice to big business. A handful of people accountable to none began to control the fate of too many. Labour however failed to keep pace with the globalization trend. Trade union movements remained non-global. This led to awesome increase of power matched with greed and misbalances. The foreclosure related financial crisis became inevitable.

Under the general term of the foreclosure crisis a drama began to unfold itself. Some companies vanished while others were gobbled up in mergers. Banks began to look at each other with suspicion. Normal financial dealings began to dry up. The governments in USA and Europe stepped in but regulations were not going to be a permanent nature. It was meant to turn the tide. Vested political interests do not permit healthy financial system to work. The unchecked market leading to the foreclosure crisis is the perfect example of this. Since government regulations failed something else will have to be thought of.

The interaction of American economy with Chinese economy led to mayhem. America began to look towards the east to exploit cheap labour for jumbo profits. Literally slave labour was used to flood America with cheap Chinese goods. The understanding forced upon by the business community on the American government was disastrous. The People’s Liberation Army owned most of the Chinese companies. This led to American falling into debt with China. The latter held USA treasury securities worth trillions. America will now have to turn to its traditional ally Europe for help. Out of this churning a new age will dawn.