Barring all the technical explanations and at the risk of sounding simplistic ... the current economic scenario in Investment Banking sectors in USA and the potential national bankruptcy of Iceland can be attributed to a combination of two factors: greed and sentiment, the lack of a balanced approach to sentiments. The bane of capitalism. Where has the TRADITIONAL approach to FINANCIAL DECISION AND RISK TAKING DISAPPEARED?
The principles OF CONSERVATISM, RISK AVERSION AND RATIONAL THINKING.
In greed, critically risky mortgage bonds were invested into and the driver for it was the superficial sentiment of global boom and the rising of the Asian tigers...
Is globalisation good? It is but when done in a tempered, calculated and rational manner.
I'm not surprised if young, over ambitious and greedy Investment Bankers did what they did. It's the system that has to be blamed. We are to be blamed...our greed , our desire for more, our dissatisfaction with what we already have and our lifestyles, our need to spend beyond our means...
I may not have structured this post well and may have also not articulated it well...but do think over what I have to say...
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