Economy
I have always been interested in the economy. However, with
the Corona crisis, the current global economy is at an abyss. Why this is so I
want to answer with the following explanation. Furthermore, I will describe who
is actually driving the economy.
For this I have dealt very much with this topic and
collected information.
When people talk about the economy today, they are
essentially talking about the financial economy. The explosion of our economy
goes back to the fact that deregulation has been going on since the 1970s. This
means that in recent years more and more rules that the banks had to follow
have been abolished. Economic opportunities have been created that they did not
have before. As a result, risks in the financial sector have grown considerably.
The hedge fund Long-Term Capital Management, founded in New
York, went bankrupt. A hedge fund manages the money of the super-rich.
They can make riskier investments than a bank, for example. But just before "Long-Term Capital
Management" went bankrupt, many big banks and other hedge funds took out
credit default insurance on "Long-Term Capital Management". In the event of its bankruptcy,
they would have benefited by up to $1 trillion. This would have driven some
investors who invested in "Long-Term Capital Management" and the
banks of the insurance companies into bankruptcy. That would have brought down
the whole financial system. However, this was prevented because 11 major banks
joined forces and absorbed this hedge fund for about 4 billion dollars.
Nothing has been done about the cause of this crisis. The
financial system has continued, and the risks have continued to accumulate.
In 2007 and 2008, the system was again on the verge of
collapse. This time the sums involved were infinitely greater than last time.
The banks were overstretched, and the states intervened with taxpayers' money.
Once again, the financial system was saved. After 2008 more and more money was
pumped into the system by the central banks. This money was distributed by
lower and lower interest rates. Through this "cheap money" the stock
markets were kept high and rose higher and higher. In the last 10 years the
markets have grown more and more.
Now the whole world has slid into recession. In addition,
the lockdown occurred in China, the world's largest economic power came to a
standstill for a few weeks. Another catastrophe, the crash of the oil price at
the beginning of March. The economic system cannot cope with all these
disasters so easily, it is in a phase of collapse. So, we know that the current
financial system cannot be kept alive much longer.
On the question of who controls the current economy, it has
to be said that hedge funds have now become so big and powerful that they
control the banks. They own innumerable shares of various banks and innumerable
companies. So, hedge funds control the economy.
I think it's sadto see that there are only a few players
controlling the economy. One day, the artificial revival of the economic system
will put a damper on our plans.
(526 words)
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