about the true causes of the financial crisis Since then interfere with economic variables such as our church day moving Protestant theologian, actor, or the inevitable "time-Talker" by Gregor Gysi to Ulrich Wickert in the discussion on the financial crisis, we know at last the true causes of the whole debacle : It was the insatiable greed of the Manager, the Finanzspekulantentum international capitalism and the evil that has once again the "market failure" to be demonstrated.
You have to be neither academic nor financial expert, to begin to suffer under this annoying Dauergeschwafel kindergarten level seriously. Of course everyone knows honest and hard working German taxpayer (as increasingly rare minority) that neither of thousands of managers and bankers have conspired to international financial crisis, still exists that such a thing as "market failure". Or are we talking recently in plane crashes and not from material or pilot error, but by the failure of the gravity?
course there are reasons for believing the state politicians and the media just now sing the praises of the evil capitalism, how far-sighted contemporaries such as the philosopher Peter Sloterdijk have the historian Thomas Hoof detected. Thomas Hoof just the situation in the magazine recently analyzed SECESSION very apt. He writes: "What now, shall be presented shortly before the showdown, by the actors of the play, saving the financial markets', still follows the knitting pattern of a classic rogue comedy and also has its entertainment value: As is the biggest bankrupt (the debt repayment incompetent states) with a noble letters of support for the gesture also completely bankrupt banks and distributed from this means he will just borrow from these banks. The sums coming here for language-rich home number in areas where until recently only the astronomers were. In the monetary alchemist have appeared alongside the famous and most took place innovative 'transmutations: From gold was paper money, paper money Paper money, a nigromantischen trick later, foam money and miraculously increased to derivatives and those derivatives. The roles in the crook comedy - with the state as a perfect Santander Saviour, the banks as a repentant sinner, the market as sprung beast - which is quite a brazen Camouflage: For it was the states that brought in companionship with the financial industry this snow ball rolling , the apparent masses of money washed clean and made unfit for circulation. And watches the brutal market (other than Rating agencies, WPGesellschaften and whole companies of national and international regulatory authorities) late indeed, but incorruptible and meticulously (and against all odds) of his office, makes his acid tests to the values and wiped the foam money from the books - and break down the process of who the . Staatskumpan not save "
The Austrian journalist Andreas Tögel looks behind the scenes:" The 'greed theory', like virtually everything that comes along with the mainstream opinion, pure nonsense. Or rather you than, Hold-the-thief-tactics' sense. The squatting in state offices and central banks fathers of the disaster (impact check with Mises's business cycle theory - keyword monetary and credit expansion), every community interest in the creation of the myth of demonic, capitalism '. Before we may preserve the omniscient and omnipotent nomenklatura "
It is instructive to venture outside the box to disable the media duration brainwashing and even seriously involved with the policy mistakes that the since now almost 100 years occurrence artificial business cycles have passed through continuous inflation. Four very solid reasons for the current severe economic crisis of the postwar period can be demonstrated beyond doubt:
first The system of fractional reserve (fractional reserve banking)
Our current banking system can be characterized as a system of fractional reserve and is also known under the term "Banking and Technology with Central Bank reserve requirements.
This world-dominant system is indeed celebrated as a cyclical engine and an indispensable guarantee for investment, in fact with the fractional reserve banking system but to a dangerous inflationary, so monetary expansion of the economies:
The still-international in similar form existing world monetary system has been known created in 1944 at the conference at Bretton Woods and institutionalized through the introduction of the International Monetary Fund (IWS) and the World Bank. At the international credit and currency markets may participate only nations that meet the criteria of the World Bank. Unlike in the 19th Century (eg by Peel's Act of 1844 in the UK) approved the IWS and the banking laws of the States concerned (including all the major economies), that the credit be awarded banks need to make very little reserve capacity, so that the output volume of credit less than 10% are held in own funds. Until the abolition of the gold backing in 1913 in the U.S. and at the outbreak of World War II in all European States, was a capital adequacy of some cases by almost 100% required by law. A simple example illustrates
today's situation:
A cash sum of € 10,000.00, which is deposited with the Bank A may, in this system for about 90%, that is in the amount of € 9,000.00 to the X be given more borrowers. This uses the borrower X loan of € 9,000.00 to settle an account of the artisan Y, which pays the money in the bank B. When Bank B thus creating a cash of € 9,000.00, which is treated as the cash balance in the originating bank A in the amount of € 10,000.00. The Bank B can again about 90% of the 9000.00-€ amount loaned out, so that shows how the reserve system to an uncontrolled inflationary, so money would not increase out that the resulting amounts of money through real values or adequate security cover. The collapse of this system is especially inevitable when the so-called cash storm comes, the savers require very large number of their savings to pay. All government-enforced protection mechanisms such as deposit insurance fund flutter, state guarantees and obligations of mutual support banks unfortunately have a false sense of security before too. But goes even a single major bank bankrupt tears all other banks, such as in a chain reaction with it. Lehman Brothers provided the proof.
The biggest problem of the fractional reserve system, however, is that the license for money-lending - loans that face do not have enough equity coverage - and persuade (also known as moral hazard) insurance fund coupled with government guarantees to frivolous actions and to enter into incalculable risks. Finally, no one is personally liable and end jumps in the state.
second The central banking system with
addition to the fractional reserve banking and the non-market, but artificially fixed interest rate for central bank money supply increase at. If the central bank interest rate below the actual market rate, it has an excess supply of credit to the episode, which inevitably lead to finance risky and ultimately unprofitable investments. The loans can not be repaid and, ultimately, lead to the collapse of the banks and companies. The central bank controls the rate of the respective banks for the volume of credit available and therefore contributes to the inflation of the economy.
third The paper money system
As mentioned earlier, were later than the beginning of the First World War the gold currency systems covered virtually abolished worldwide. The enormous burdens of war would not otherwise have been financed. Prior to the abolition of the gold currencies until then outstanding paper money is only a substitute for commodity money in the form of gold or silver. A bill was then the meaning of a deposit slip. For example, the German Reichsbank until 1914 was always obliged to pay out to the bearer of a note from the corresponding value in paper gold. This system led to a strong price stability, so that especially in the early industrialized countries like the UK or the U.S., prices for consumer goods in a period of more than 100 years remained almost constant and even amount of goods through propagation, through more efficient production methods and the expansion of international trade easily discounted.
The solution from the gold standard took place in stages. In the U.S. you had in 1913 released from the "depository receipt" system. In 1933, the U.S. also said the private gold ownership illegal, it had to be delivered over a number of ornaments out private gold reserves to the U.S. central bank. Thereafter, by President Roosevelt and the Einlösegarantie lifted the dollar bills for gold. 1971 President Nixon abolished from the Einlösegarantie of the dollar against gold to foreign central banks. Then lost in U.S. dollars within 30 years about 80% of its purchasing power.
The current paper currencies are defined in economics as a regular legal tender. But this is the economic origin of money does not do justice. Money is in fact defined as commodity money, ie to a generally accepted, highly valued medium of exchange. Money is particularly characterized by its stable value, durability and scarcity. Economically, therefore, can only precious metals like gold and silver meet the true function of money.
4th The U.S. housing bubble
In 1938, President Roosevelt established the Federal National Mortgage Association (Fannie Mae) was established. The purpose of this state-owned bank which could be comparable with the German Kreditanstalt für Wiederaufbau, it was awarded a state-run and low-interest mortgage loans based Institute for vulnerable groups of people with virtually no credit check in order to encourage the private real estate acquisition. The scope of Fannie Mae in 1974 (abbreviated Federal Home Loan Mortgage Corporation, Freddie Mac) through the establishment of a second National Bank with the same task pane added. 1995, the U.S. Congress adopts the so-called Community Reinvestment Act (CRA). This law also stipulates the private commercial banks, the credit criteria for lending to a "socially weak" selected group of people to loosen hard to facilitate the purchase of real estate for these people. After 11 September 2001 finally begins a series of 13 massive interest rate cuts by the U.S. Federal Reserve.
The measures described above led initially to a dramatic increase in lending to weak private cash investors who purchased in part, without any equity share in increasingly real estate, which real estate prices allowed to rise rapidly in the United States. To keep credit market shares, including large private commercial banks and the lending from.
The German Industrial Bank AG (IKB) is founded in 2002, the special purpose vehicle "Rhineland Funding Capital Corporation to enter out of their budgets in the U.S. mortgage market may be, the promises seem ever-rising house prices.
The actual financial crisis begins in the summer of 2007. In August 2007, breaking with Deutsche Industrie Bank AG (IKB), the first (state) German bank, with an annual loss of about € 700 million. The Saxon state bank must, because of similar massive losses of its special purpose vehicle in the U.S. mortgage market are forcing sold to LBBW. In October 2007, reports the American Citigroup Depreciation of EUR 55 billion U.S. dollars. In January 2008, WestLB announced an annual loss amounting to 1 billion EUR. In March 2008, reports the Bayerische Landesbank losses of up to EUR 3.8 billion on failed speculation in the U.S. housing market. IKB is finally sold in August 2008, the American investment bank Lone Star. The total loss to the taxpayers at this time is estimated at about 10 billion EUR.
The culmination of the banking crisis is reached in September 2008 with the collapse of Lehman Brothers in New York. A worldwide slump in stock prices is the result.
Consider again the U.S. housing bubble more precisely: It just was not a market failure that led to the crisis but adjusted the natural market mechanisms fed by inflation bubble: The U.S. policy it had, like always meant only good: cheap state loans should also help poorer classes for home purchase. This policy of rampant credit expansion led to an artificially-fed demand for U.S. real estate without real capital formation had taken place. The rise in house prices was seemingly no end. The bubble had to burst
when the Federal Reserve's inflation diagnosed with a more restrictive monetary policy, interest rate hikes so opposed. Actually has to be we still all remember the price records in summer 2008 (gas, petrol and general commodity price explosions). Even then, we wanted to persuade incompetent or populist politicians, evil and sinister speculators Group cartels would screw the price spiral for the exploitation of the masses to be gaining momentum. Price increases, however, were exclusively the result of the above-described increase money supply (inflation). The currencies had depreciated by massive purchasing power losses. Not the consumption and raw material prices rose, but dollar and euro lost their purchasing power. In this period of high prices invested unsuspecting German state banks such as BayernLB, WestLB, LBBW and IKB blithely German taxpayers' money on the U.S. housing market. This market had begun in 2005 by the rate hikes by the Federal Reserve ultimately collapse because the price increases triggered by the mortgage loans led to the bankruptcy of the first loan borrowers. Like a snowball was a chain reaction: Low-income home buyers could no longer use interest and principal. The house was foreclosed. The many non-performing mortgage loans fell but now the value of securities pledged as collateral, but with bubble prices, evaluated homes. The banks had to correct the loan value and thus fell into bankruptcy soon. The financial crisis was there. The market was no longer with cheap credit, inflation, bubbles deceive and political programs, but threw all the parties very roughly and quickly to the earth.
this literature some tips guaranteed not to talk-show level:
Ludwig von Mises: Theory of money and fiduciary media, Vienna 1912
Ludwig von Mises: the social economy. Analyses of socialism, Jena 1922
Ludwig von Mises: Basic Problems of Economics, Jena 1933
Ludwig von Mises: Bureaucracy, New Haven, 1944 (available online at: http://docs.mises.de/Mises/Mises_Buerokratie. pdf
Ludwig von Mises: Human Action, Treaties on Economics, Chicago 1966
Friedrich August von Hayek: The Road to Serfdom, reprinted Munich, 2003
Friedrich August von Hayek: The pretense of knowledge, Tübingen 1996th
Franz Josef Strauss: Bids of freedom, Munich 1980
Hans-Werner Sinn: Is Germany still be saved, Munich 2003
Gabor Steingart: Germany, the descent of a superstar, Munich 2004
Roland Baader: money, gold and God players, 2 . Edition, 2005 Gräfelfing
Dr. Thomas Jahn
