Lately, no other illusion broke like the illusions of the US financial institutions. And man!!! Wasn't it awfully dreadful. Completely wiping out three major companies in a matter of few weeks. Now all that's left of these companies are bewildered investors scrambling around looking for someone to blame.
The crisis started the day when these financial institutions decided to be more lenient in giving loans to people belonging to the sub prime category. There was always a inherent risk of these people defaulting in their loans. So to make their skeptical investors happy they charged a few extra percentage points in the interest rate of these people. But doesn't increasing the interest further increases the risk of defaulting. Its like charging less from the rich and more from the poor for the same thing. How did it appear as sound investments to these financial institutions?
Even the government was happy. Why wouldn't it be. Who wouldn't want to be known as the man who was responsible for 'delivering' houses to the poor.
So who should be blamed for this act of charity? These institutions, who foolishly ran after increasing profits while ignoring the need to make a strong foundation to fall on? Maybe, the government, for overlooking the emerging crisis just to appease their vote bank. Their very own citizens are blaming them for the whole mess. They should have certainly put more regulations to avert such a situations.
Its time for governments to realize a robust economy cant be created by giving away "hollow dreams" at expense of others. Its about investing on people who can return it at a higher value.
This is the only way a country can prosper.
The crisis started the day when these financial institutions decided to be more lenient in giving loans to people belonging to the sub prime category. There was always a inherent risk of these people defaulting in their loans. So to make their skeptical investors happy they charged a few extra percentage points in the interest rate of these people. But doesn't increasing the interest further increases the risk of defaulting. Its like charging less from the rich and more from the poor for the same thing. How did it appear as sound investments to these financial institutions?
Even the government was happy. Why wouldn't it be. Who wouldn't want to be known as the man who was responsible for 'delivering' houses to the poor.
So who should be blamed for this act of charity? These institutions, who foolishly ran after increasing profits while ignoring the need to make a strong foundation to fall on? Maybe, the government, for overlooking the emerging crisis just to appease their vote bank. Their very own citizens are blaming them for the whole mess. They should have certainly put more regulations to avert such a situations.
Its time for governments to realize a robust economy cant be created by giving away "hollow dreams" at expense of others. Its about investing on people who can return it at a higher value.
This is the only way a country can prosper.
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