In the darkest depth of the human mind lies an ever present need for ownership. This urgent need controls the greedy individuals, who always seem to seek to expand their property, even if they are not able to afford their expenses. Wasteful cars, gigantic homes, seasonal fashion, unnecessary large television screens, monthly pleasure trips and the latest inventions of the entertainment industry help those greedy individuals to escape the smell of their rotting soul.
Fantastic was not good enough for their consume-oriented life. It had to be the latest, newest, biggest and fastest as long as it made them feel more valuable as a person. The unstoppable desire for more kept growing even after the ownership obsessed people could no longer afford the products that they bought. The solution to this problem was very obvious. They had to borrow money, so that in reality someone else was paying for their excessive expenses. The generous financial market of 2004 was crowded by rich investors who were ready to lend money at a very high risk, because the want for wealth was blinding the logic in their greedy minds.
An explosive bubble of insecure loans formed itself in the vast space of the financial market. Desperate addicts of consumption borrowed more money than they could pay back. The lenders continued to lend even more until they realized that their investments were riskier than they first assumed. They fraudulently sold their depraving loan contracts to the foreign investors, who were poorly informed about the real value of their now worthless loan contracts. Time passed and the bloating bubble of loans has grown into cosmic proportions until it collapsed in form of a picturesque bankruptcy case of The Lehman Brothers.
Loud waves of sound from the epic downfall of the Lehman Brothers made it clear to every self-respected investor that the market was now infected with the illness of fraud and mistrust. The basic forces of capitalism have failed and the weakness of the banking system was finally exposed to the disinterested public. It was now too obvious that the monogamous system of investment banking was cleverly designed to fail in the long therm. The unsuspecting banks and investors conducted their businesses in a very similar way. Better said, the major investment banks almost exactly copied the ways to conduct business from their competition. After all, it was only natural for them to do so, because the club of CEOs from the banking industry is a very small one. Every one knows the others and so they copy each other, just to make their jobs easier. If one of the banks invented something profitable, than the others copied it without to ask about the risk or sustainability of the concept.
Failing banks forgot to diversify their investments, instead of overspecialising in the mortgage market. The system of investment banks became corroded as their overspecialisation was found to be a perfect food on the breeding ground of weakness. They invested too much money into insecure loans until they were no longer able to pay off their creditors from China and Saudi Arabia. The result of this was their bankruptcy. As they collapsed one after another their falling ruins crashed onto the roofs of the smaller banks which were not able to sustain the weight of the massive debt that was left for them.
Collapsed loans left a big hole in the emptied pockets of investors, financial institutions and even some smaller countries like Pakistan who desperately applied for more loans. Money started to become much rarer than it was healthy for the market. Untrusted loan applicants were send away, as they tried to borrow fresh liquidity from the banks. The dreams and projects of epSos.de failed to become reality as the banks failed to supply them with fresh seeds of capital. Scarred shareholders attempted to save their investments as they sold their shares for the daily falling prices of the reddishly glowing stock exchange markets. Some of the shares lost about 30% of their previous value , if they were lucky enough not to loose more. The financial crisis started to evolve into a global economic crisis.
In response to this economic crisis, companies started to prepare for the coming recession. They released thousands of unhappy employees, just to be fitter when recession strikes empty holes in their wallet. Productivity, efficiency and innovation once again became more attractive to the companies, who were not forced to think about it until the financial crisis occurred.
In conclusion to this economic slowdown, governments across the world tried to heal their ailing economies by lending money to corroded financial institutions and large companies. Some of the richest countries like China and Germany promised to invest unimaginably large amounts of money into their domestic economies. Official conferences and forums were held with a faint hope to find a quick solution to the most visible symptoms of an unidentified problem that was secretly hiding from the overstressed minds of the bold thinkers who were too busy to sustain their unrealistically monolithic view of the world.
Healing the symptoms will never resolve the problem that caused them. Regarding the sector of finance the problem was very simple. Too much money was concentrated in the very few hands. Disproportional distribution of money makes a large and risky investment more harmful, when it fails. A lot of people had to face liquidity problems. This is not only not fair but also unhealthy for the economy. The issue would be very unlikely to occur, if the financial market was diversified enough, so that no single bank could ever destroy an economy of a much bigger proportions than the bank itself. In opinion of epSos.de the answer to the economic crisis of 2008 must be more innovation, higher efficiency, brave competition and diversification in the financial market.