"O, you who believe! Be afraid of Allah and give up what remains from RIBA if you are believers. And if you do not do it, then take notice of war from Allah and His Messenger"
(2:279)
As we notice the economical trend, financial crashes often happen once every 10 years, or at least 10 years. For example, in 1997, the Asian Currency Crisis caused financial crashes in Asia that affected are Thailand, Indonesia, Philippine, Malaysia and South Korea
The Asian financial crisis, also called the "Asian Contagion," was a sequence of currency devaluations and other events that began in the summer of 1997 and spread through many Asian markets. The currency markets first failed in Thailand as the result of the government's decision to no longer peg the local currency to the U.S. dollar (USD). Currency declines spread rapidly throughout East Asia, in turn causing stock market declines, reduced import revenues, and government upheaval.
This crisis was not an accident. It was caused by an out of control industries. Since the 1980s', the rise of the US Financial Sector had led to a serious of the increasingly severe financial crisis. Each crisis has caused more damage. While the industry has made more and more money.
After the Great Depression, the United States had 40 years of economic growth, without a single financial crisis. The financial industries were tightly regulated. Most regular banks were local businesses, and they were prohibited from speculating the depositors' savings.
Investments banks which handle stock and bond trading was small private partnerships. In the 1980s', the financial industries exploded. The investment banks went public (read: Going public on Wall Street), giving them huge amounts of stockholders money - People on Wall Street started getting rich. (read: pay per worker 1978 - 2008)
In 1981, President Ronald Reagan chooses treasury secretary the CEO of the investment bank Merrill Lynch - Donald Reagan. The Reagan administration supported by economist and financial lobbyist started a 30-year period of financial deregulation.
In 1982, the regulated administration deregulated savings and loan companies, allowing them to make risky investments with their depositor's money. By the end of the decade, hundreds of savings and loan companies had failed. This crisis caused taxpayers 124 billion dollars and caused many people their life savings.
Thousands of savings and loans executive went to jail for looting their companies. One of the most extreme cases was Charles H. Keating. In 1985, when Federal Regulators began investigating, he did hire an economist named Alan Greenspan where he paid him 40,000 dollars. Charles Keating went to prison shortly afterwards.
As for Alan Greenspan, President Reagan appointed him Chairman of the American Central Bank, the Federal Reserve. Greenspan was reappointed by President Clinton and George W.Bush. During the Clinton administration, deregulation continued under Greenspan and treasury secretary Robert Rubin, the former CEO of the investment bank Goldman Sachs, and Larry Summers a Harvard economics professor.
By the late 1990s', the financial sector consolidated into a few gigantic firms. Each of them so large, their failure could threaten the whole system. And the Clinton administration helps them grow even larger.
Comments
Post a Comment