Economics and Business - Inside Job About Sustainable and Systemic
Yesterday I was in the theater watching
Inside Job, the controversial and hard documentary Oscar winner in that category que cuenta cómo se fraguó la actual crisis económica que todavía nos tiene tiritando, como los
datos del paro del primer trimestre se encargaron de recordarnos ayer. A mi me encantó. Creo que está muy bien llevado, que todo se cuenta con mucho ritmo y con cierta ironía en ocasiones. Es cierto que hay fases que requieren unos mínimos conocimientos de economía, pero el cartelón de todos los públicos está muy bien traído. La economía es una ciencia social y, en este caso, la historia se cuenta en clave de millones de $, pero también de millones de puestos de trabajos perdidos, de cientos de miles de ahorradores que se arruinaron, de las decenas de miles de familias que perdieron sus houses and all that somehow we felt "cheated" during this time by people who were once considered brilliant heads pensantes.Llevo, therefore, turning to the head and, without wanting to unravel the movie, they wanted share some ideas.
1) Performance - Risk, the combination that is always: the late 70's, Milton Friedman, Nobel Prize in Economics in 1976, was the economist of the moment. He believed in a free market, in which the state would play an sporadic. When Reagan came to the White House in 1981, began a career deregulatory than any of his predecessors (Bush father, Clinton and Bush Jr.) wanted to stop. As a result, major companies formed the North American investment banking, most SMEs in the 70's, began a career that became dizzy companies "too big to fail" ie, whose failure could endanger whole system. Its history over the past 30 years has been plagued by scandals, agreements extra millionaires and practices to the limit. They won a lot of money, yes, but running huge risks, as the film takes care to demonstrate. In this crisis that we are living, curled a loop the loop with self-destructive.
Commercial banks gave mortgages to families. Formerly, he was earning money when they repaid the loan, but in the new deregulated era, banks earn money securitized mortgages, which were sold in funds (CDO) through the investment bank to investors around the world. The more mortgages were made, the more money they earned all the participants of the festival, so it started to give the famous NINJA mortgages (no income, no job, no assets). Getting a loan has never been easier, because commercial banks was concerned that anyone could buy a house Your risk is covered since the securitized mortgages. The easy availability of credit, caused the price of housing in the U.S. are fired, so spread the belief, which also came to Spain that never lost housing value.
To cover the risk of subprime mortgages (subprime) insurers began to make money marketing coverage against possible defaults, securitized under the name of CDS, which were also sold to citizens around the world . The more mortgages, more money earned and all the risk, however, was increasingly high. The bonus of the managers and employees of banks and U.S. investment bank, depended continue to give much of bellows to this spiral, which encouraged more and more risk taking.
Economics, as said earlier, is a social science and as such, is full of relative truth. Valid prescriptions out of a crisis, may not be valid for others, because ultimately the societies and environments vary, causing varying perceptions and also human psychology. However, if there is a universal truth that is always true is the binomial performance - risk. We are as we are to have lived on the edge.
2) Absence of short-termism Values \u200b\u200b+ Excess + Ambition = Crisis. This idea is Pilar Gómez Acebo and fully subscribe. "Inside Job" shows how the major investment banks knew they were selling junk with an almost radioactive toxic. Banks and mortgage brokers knew they were cheating and excessive risk families by providing loans to people who could hardly return. American politicians lied even to his EU colleagues in 2008, denying the disaster that was approaching (the intevernción magnificent Christine Lagarde, French Minister of Economy in the film). Major American Universities teachers removed Researchers jacket to put on the heat of important propagandists bank checks, governments (the case of Iceland is striking) and politicians. That is a lack of ethics and professional ethics presentable.
Sumémosle the need to make profits at any price and as soon as possible. Short-termism is mortal of necessity for companies, as well as over-ambition, the desire to earn more than reasonable, wanting to squeeze the system. Both aspects Levan you back to the first point, to take risks beyond what is reasonable. Some say that this crisis is, fundamentally, values, and I will subscribe. We have lost the north completely.
3) The crisis is global (unless you are a banker, especially in the U.S.): In a globalized world from an economic perspective, social and cultural problems are global. The challenges facing humanity as they are. Climate change, poverty and hunger are problems of all, because the agents that create wealth, businesses, are located throughout the mundo.La economic crisis, therefore, is global, and I dare id est that following will be also.
The subprime contagion to Europe came from the hand of the rating agencies. These, awarded the highest rating possible to the CDO and CDS, which encouraged banks in Europe and around the world to invest in them, recommend them to their clientes.Cuando Lehman Brothers, the initial problem was that nobody knew exactly how much "shit" was, and what is worse, the value that "shit", sparking a bank run that credit dried up worldwide. Rating agencies, of course, charged to the investment banks that sold the aforementioned "shit." "They behaved with integrity and professional ethics? I recommend watching the movie for everyone to form their opinion.
When José Luis Rodriguez Zapatero said that we had the best of the world financial system and that this crisis was not that affected, proved not understand how the global economy, but was not entirely wrong. English banks could not participate in subprime party by certain regulations of the Bank of Spain, however, the hangover hit us squarely shindig.
The case of Spain has been different. When in 2001, much of the OECD economies into recession by the collapse of the dotcom companies , our country was one of the few who remained apparently robust growth. There were then three very important phenomena to understand our crisis: 1) Increased demand for housing, as a result of the rise of immigration (between 2000 to 2007 our population increased by 5 million people, of which more than 80% were foreign), which coincides with a shortage of housing, 2) Interest rates ridiculous, allowing access to very cheap financing, 3) Integration of global capital markets, allowing our financial system to use foreign banks to finance much of our development. Put another way, our party is pagócon our savings and with much of the savings European citizens. The easy availability of loans and the housing shortage, the price shot them, creating a bubble espectacular.La another consequence is that the corporate and household debt grew exponentially. As proof, just this fact: our current account deficit rose from $ 23,200 million to $ 145,300 million. The houses saw their prices increased an average of between 12 and 13% annually.
interbank
When panic spread throughout the world in 2008, our banks and saw how they shut the tap on international funding, forcing them to leave the race multiple companies as well as denying credit to households and businesses. As a result, the financial crisis became an economic crisis of the first order.
is true that our banks and they had, and thank God, anticícilicas provisions, but they were too exposed to real estate. What happened then is beyond the scope of this post, but I would target a very specific idea. Our banks have not wanted to learn the lesson yet, probably with the connivance of our government: How much "shit" are in the form of housing? And how much really said "crap"? In tanto en cuanto no se sepa, difícilmente les volverán a abrir el grifo en el mercado interbancario, por mucho que aumente el "Core Capital". Pero esta es una opinión mía.
La crisis económica, por lo tanto, se produjo como consecuencia del contagio de la crisis financiera. Eso se tradujo en millones de puestos de trabajo perdidos, caídas del consumo, caídas de los fletes, caídas de producción en las fábricas de todo el planeta, en definitiva, pérdida de riqueza en todas partes. Salvo para los banqueros, quiénes apenas unos meses después de ser rescatados, volvían a cobrar sus escandalosos bonus.
4) Sustainability must be systemic: To date, the term sustainability has been linked to the environment, sometimes for social purposes. We have forgotten the third leg. Sustainability must also be economic. Or what is the same, sustainability must be systemic, including the three dimensions of the same. It is about creating long term value, both economically, socially and environmental. This does not mean that there will be no crisis, because neither markets nor governments nor the people are perfect, but that those dimensions are proportional, not today.
Our planet as studies show is far from
sustainable environmental standpoint , as seen in studies of ecological footprint. The growing gap between rich and poor, not only between north and south, but in countries like the U.S. or permanent violations of ILO principles by many multinationals (abolition of forced labor, use of child labor, discrimination and prohibition of association and trade unions) shows that our system is also far from being sustainable from the point of view.
However, rarely do we ask in the years before the crash of 2008 whether levels of indebtedness to those who had arrived were sustainable businesses and families. If prices were paid by sustainable living in certain houses. If the Porsche Cayenne was sustainable circulating in Spain. As if it were sustainable stratospheric bonuses bankers around the world. In short, if it was our standard of living sustainably. There was wealth, corporate profits had very little support from behind. No housing bubble, so that we We understand, Spain had grown, but not to the levels it did during 10 years, indicating that much of what he was fictitious. Many people have lived beyond reality, and now we are paying.
5) The problem of "non-moral": This crisis is devastating as the data, but for me, the hardest thing is there is no moral. Those who got us into this mess, remain in the U.S. Federal Reserve or advising the president on duty in the U.S.. The bankers do not go to jail, the bonus is still paid, and the bill we are paying for all citizens. Some through our taxes, other through unavailability of a job. Companies falling or barely survive, and governments have looked the other way, rescue banks while trying to retrace his steps. And that's just in the EU, U.S., not even. The worst is not the destruction of wealth, but the example we have, the message is transmitted to the future: speculation, risk, take the money and run. And pay the other party.
