The financial crisis and its consequences: A look behind the facades of the system

Since the global financial crisis in 2008, the global economic system has been in a permanent crisis state, characterized by a variety of scandals, political decisions and economic developments. The event marked the beginning of an era in which the banks and financial institutions of Europe and the United States with enormous sumsTax money had to be supported to protect the system from a complete collapse. Despite these rescue operations, however, it soon became apparent that the measures only treated the symptoms of the disease, while the underlying structural problems continued to exist. The banks had become involved in risky speculation and questionable business practices,which often included illegal methods. Although they were sentenced to billions in penalties in the course of the crisis, it was only a small fraction of their actual profits generated by shady business and illegal practices. These practices are still part of the normal business repertoire of many financial institutions, even if they are hardlystill be publicly displayed. The official promises to provide more control and transparency in the financial sector in the future turned out to be empty words that only served to calm the public. The reality shows that the system is still deeply ill, and hope for a fundamental reform has vanished into thin air. Instead of a real changeRather, banks and financial markets are relying on a continuation of the status quo, where only profits count, while risks and social responsibility are left behind. This development raises the fundamental question of whether the system is still repairable at all or whether it is only a matter of time before it finally collapses. The ongoing neglect ofResponsibility and focusing on short-term gains harbor the risk of another collapse, which could have even more devastating consequences for society.

The return of the ancient elites and political support

In this context, it is hardly surprising that political leaders and decision-makers continue to follow the old patterns. This becomes particularly clear in the policy of the current US President, who after his election victory in series signs decrees, which are already weakening the already sluggish regulations in the financial sector. These measures, which at first glanceRelaxation of controls appear, in fact, are a step backwards into the era of uncontrolled speculation and greed. What is particularly striking is that numerous former top managers of the investment banks are sitting in his cabinet, which makes it clear that the old elites want to hold their positions of power and even want to expand them. This staffing is not a coincidence, butA clear signal that the interests of the financial world continue to take precedence over the interests of the general public. In this environment, politics seems to act more as a henchman than as a guardian of public interests, which further undermines trust in the democratic processes. Meanwhile, the European and American central banks are, above all the European onesCentral bank and the Federal Reserve, with their gigantic money injections, hardly able to curb the flood of money. For years, billions have been pumped into the markets incessantly, believing that these measures will stabilize the economy and strengthen it in the long term. These so-called purchase programs, which are more reminiscent of a planned economy in terms of their dimensions and effect,lead to the classic principles of free markets becoming increasingly absurd. The logic of markets regulating themselves is repeatedly questioned by the reality of the enormous interventions. The impression is created that an artificially created economy exists in which the rules of the market economy only apply to a limited extent. There is a risk thatSystem collapses when central banks eventually stop keeping the money locks open and markets need to adapt to reality. This development is a clear sign of the profound instability of the current economic system, which is based on artificially created conditions and is hardly future-proof.

The consequences for investments, the real economy and the debt of the states

Despite the gigantic amounts of money pumped into the markets, the actual effects on the real economy show a different picture. The banks that receive this money at zero percent or even less interest are hardly able to make sensible investments from them. They hesitate to lend to companies because they only invest if they also use theirproducts can be sold. But consumers’ purchasing power is low because of the uncertain economic situation and high unemployment, which additionally inhibits the investments of companies. Many banks are forced to store their cash in vaults, similar to the old days, because they can no longer find any useful uses for the funds. at the same timeMany banks use their funds in riskier speculation on the financial markets and real estate market to still make some profits. The result is a bubble that can burst at any time and an economy that is becoming more and more dependent on speculative gambling. The system is built on an unstable basis, and the risk of a renewed collapsegrows with every day. The debts of the states are another problem that exacerbates the situation. This is particularly evident in countries like Greece, which is just an example of a number of states in a deep debt trap. Despite the billions of rescue packages, the country has bled out economically, the people are suffering from poverty and high unemployment,while the state is hardly capable of acting. The so-called rescue money, which is said to be used to stabilize the economy and to fulfill the reform requirements, in fact largely end up with foreign banks and creditors who were already heavily in debt before the crisis. Most of these funds have the banks that are already in trouble before the crisisstuck, booked as risk-free profits. The taxpayers in Europe guarantee debts that they will never pay back, while the country itself is as broke as before the introduction of the euro. The situation is so serious that it is already foreseeable that the last rescue attempts will only be a postponement of the final collapse. Politics is about toThe challenge of postponing the problem until the end of the European super election year 2017, but a sustainable solution is still not in sight. The crisis is just postponed, not lifted, and confidence in the system is increasingly dwindling. The burdens on the European countries are growing, while the mountains of debt are becoming increasingly confusing. The danger of a renewedCollapse is omnipresent and grows with every day.

Italy, the European debt trap and the risk of bankruptcy

Italy is also in a critical situation that is hard to miss. With national debt, which accounts for more than 137 percent of gross domestic product, the country has long since reached the brink of bankruptcy. The high unemployment that has existed for decades is at a high level, while industrial production is at a level that dates back to 1985remembered. Despite these alarming figures, the Italian state can continue to supply itself with fresh money thanks to the European low interest rate policy. It is astonishing that Italy can even absorb money on the capital markets, although the economic situation in the country is extremely tense. This approach is hardly understandable from an economic point of view, because itencourages Just the debt and exacerbates the crisis. It is a clear indication of how broken the European system is now. The low interest rates made possible by the European Central Bank’s policies are just a short-term trick to maintain solvency. In the long term, the burden will only become more intolerable, as debts are growingand the economic situation deteriorates. Politicians ignore these facts because they rely on short-term survival and the crisis in the background is constantly growing. The risk is that the crisis will eventually become uncontrollable and will bring the entire European system to its knees. The economic downward spiral threatens to turn faster and faster while theMountains of debt are becoming increasingly insurmountable.

The devaluation of the savings, the consequences for old-age provision and society

The policy of zero interest, which is enforced by central banks, has serious consequences for the savings of the population. Interest on savings accounts, life insurance and government bonds has fallen to zero or even below, which means that savers are constantly falling. many people who put their assets in supposedly safe forms of investmenthave invested, their reserves are slowly dwindling. The losses in returns mean that old-age provision is increasingly endangered for a whole generation. The classic security for age, which used to be considered reliable, becomes less secure every year. At the same time, the zero interest rates deprive the banks of the opportunity to give sensible loans, which theeconomic development additionally slows down. The consequences are devastating: the danger of poverty in old age is growing, social inequality is increasing, and society is increasingly spiraling into a spiral of insecurity and social reduction. The policy seems to be conscious of this development in order to ensure stability in the short term, but in the long term there is a risk of social catastrophe,which could shake the foundation of society. People lose their trust in the system, while the gap between rich and poor continues to grow. The future looks bleak for those who hope for a stable retirement provision, because the current monetary policy makes this protection increasingly impossible.

The banks’ crisis, the risk of a system collapse and the risks

The banks themselves are in a deep crisis, which is closely linked to the low interest rates and the risky business. Many institutes that used to be considered solid are in serious trouble due to the ongoing zero interest rate policy because they can hardly make any profits. The solvency of many banks is at risk and there is a real danger that individualInstitutes will slip into bankruptcy sooner or later. The savings banks and cooperative banks, which traditionally were considered stable, are particularly affected. Due to the negative interest on their call money accounts, many municipalities are forced to pay negative interest instead of receiving interest. Even companies that wanted to use their reserves for investments are due to the low interest ratespunished because they hardly ever get any returns. Although the ECB is trying to stabilize the situation by buying corporate bonds, this can only alleviate the symptoms, not remedy the causes. The underlying problems, such as over-indebtedness and uncontrolled speculation, are only concealed. The risk of a renewed collapse increases with each passing day, andThere is a threat of an even more serious financial crisis that could completely destabilize the system. The signs indicate that the system is sitting on a powder keg that could explode at any time if no profound changes are made. The crisis is inevitable if the existing system is not fundamentally reformed, but the political andEconomic forces seem unable to bring about these changes. Risks and dangers are increasing, and society is facing an uncertain future in which confidence in the entire financial system is constantly dwindling.

The concentration of power in a few corporations and the threat to democracy

In recent decades, power in the global economic structure has shifted significantly. Instead of a diverse and decentralized economic landscape, few large corporations dominate today, which have a significant influence on political and economic development with their market power. A few companies, especially in the food sector, control almost all of theworld market. Only ten corporations, including well-known names such as Nestlé, Tyson Foods, Mars, Kraft Heinz, Unilever and Danone, dominate the global food market. This concentration of market power is not a coincidence, but the result of decades of strategies aimed at eliminating smaller providers and controlling the most important resources. The consequence is that theDiversity of the economy is dwindling, while the few corporations are becoming more and more powerful. They often no longer know where to go with their enormous mountain of money because they no longer cover real needs, but only rely on quick money. These monocultures lead to a dangerous dependency, where innovations stagnate and society is becoming increasingly dependent on thedecisions of these few large companies. This development threatens democracy because it increases the political influence of the corporations and shifts the balance of power in favor of fewer actors. Trust in the free market is dwindling and the risk of economic collapse is increasing because the balance between control and freedom has been lost. itThe question arises as to whether this system can still be saved or whether it will break up sooner or later because social and economic stability is endangered. Society is in danger of losing its independence and giving control of one’s own economic life to a handful of large corporations that only pursue their own interests. This trend is onethreat to democracy and social stability.

The loss of values and future prospects

This entire system is based on the dangerous illusion that money and growth are the most important values that drive a society. It is ignored that the really important values are the goods and services that enrich our lives, as well as the innovations that drive progress. Instead, we always focus our attention on themNumbers, the virtual values created by manipulation, speculation and artificial high valuations, only to burst into a bubble. The financial crisis has shown how fragile this system is when illusions break down. The causes lie deep in the structures based on fraud, greed and short-term profit-seeking. The last crisis was just a manifestationof these deep problems that existed long before their outbreak. There is a constant attempt to save the system, but in truth only the symptoms are treated, while the causes remain untouched. As long as money has no real value, but is only a virtual illusion, there is a risk of a new collapse. It’s high time to get rid of the false illusionsand build a sustainable, stable economic order based on real values and accountability. Only in this way can trust in the system be restored and society can take the path to a fairer future. A future in which not only a few benefit, but all people benefit from a functioning, fair economic andFinancial system. It is up to us to lay the foundations for such a change before it is too late. The challenges are great, but the chance for a better world is there if we only have the courage to acknowledge the truth and act accordingly.