A handful of weeks back, Miguel Franco, mayor of the Mexican city of Tepatitlan (about sixty miles NE from Guadalajara) gave, with the common candour & honesty of individuals lands, his diagnosis about the financial crisis. Much more or considerably less, he stated the there is no such crisis, because more cash is becoming produced from organization every day "right now there´s income & the working day soon after the guys from the inventory industry say that is absent, who ate it? The income is nevertheless there and they're not heading to cheat us".
This instead curious statement brought on him (as you could assume) a storm of jokes and critics, but, reality be stated, despite his evident basic-minded reasoning, this Mexican Mayor has rubbed the salt in the wound of one of the elements to take into account in mild of the current economic turbulence.
It really is accurate. Daily much more funds is being "manufactured", there are more products & far more economic action. Till, out of the blue, a group of investors say that the shares offered on the marketplace no lengthier have the value they utilised to, and, as obvious consequence, the entire planet faces the danger of a recession.
The actual question right here is: what the hell happened, for case in point, with Citigroup? Virtually two years ago, this monetary organization had a inventory price of 277,000 million pounds, on the other hand, this very last 7 days its price experienced plummeted to simply six,000 million. This means that 271,000 hundreds of thousands vanished on slender air, but why?
The distressing reply is that Citigroup in no way actually had a worth of 277 thousand million bucks. This number was not backed by concrete reality, but by the intended profits foretold by the "monetary analysts" (a mixture among sorcerers and businessmen). So, when Restaurants Rancho Mirage came trembling down, the buyers loudly crashed their heads in the tough, unmerciful genuine globe.
The crash in the cost of the shares of Citi & a bunch of other organizations who have misplaced as considerably as ninety% of their worth, constitutes an indeniable evidence that our existing economic technique is standing in bare air, keeping from illusions, cheats and hopes, which turns into genuinely hazardous in generalized worry occasions, as people we live in.
They will in no way admit it, but not even the economists experienced a complete thought about how deep is the crisis which have been its triggers and how much it will just take us to get out of it. Concealed guiding their baroque math & unintelligible principles, they're just as confused as we are.
We need to understand, as soon as and for all, that the financial system is not, and can in no way be an specific science. The financial technique is much more like an enraged horse with meth dependancy. We can attempt to tame it, but we'll in no way completely be successful.
Here's just one particular case in point. The Funds Trade industry alone moves far more than $one,350 TRILLION bucks each and every 12 months (3.7 trillion each working day). That's just also a lot money to track and see if the counts match.
We stay in the center of an economic climate moving at the speed of mild and the only factors we can do is making use of our frequent feeling and hope that the waters return to their level, because, at the end of the working day, the tempting inventory exchanges & entire world financial system are just illusions, just a Mirage.