In the accompanying post, we discuss the global distress resulting from the dramatic nosedive of world economies. The general belief is that this situation was brought about by greed and corruption in financial firms, while our government loosened regulations and oversight. Most of you will agree that the lack of integrity (excerpt from lecture in September 2007 (3:09): Make Integrity a Habit) is a major cause for this mess. But but is there more?
Has there been a lack of all five positive core values (integrity, commitment, persistence, teamwork and communication) in the actions of corporate executives and government?
Can you discuss this, citing examples?
I agree with Joushua Goodlett that Teamwork and cooperation have also played a role in the current global economic crisis. It may not necessarily have been a breakdown that played a part but rather a lack of increased cooperation and teamwork among.
The current economic crisis is not a sudden turn of events. The credit for this situation cannot be attributed to an individual or a group of people. I would say it is a layered irresponsibility, with hard-working home-owners and billionaire villains each playing a role. We are in this situation due to lack of integrity.
The Federal Reserve – slashed interest rates after the dot-com bubble burst, making credit cheap.
Home buyers – who took advantage of easy credit to bid up the prices of homes excessively.
Congress – This supports a mortgage tax deduction that gives consumers a tax incentive to buy more expensive houses.
Real estate agents – most of them work for the sellers rather than the buyers and who earned higher commissions from selling more expensive homes.
The Government administration – which pushed for less stringent credit and down payment requirements for working and middle-class families. It also failed to provide needed government oversight of the increasingly dicey mortgage backed securities market.
Mortgage brokers – who offered less-credit-worthy home buyers sub prime, adjustable rate loans with low initial payments, but exploding interest rates.
Wall Street firms – who paid too little attention to the quality of the risky loans that they bundled into Mortgage Backed Securities (MBS), and issued bonds using those securities as collateral.
An obscure accounting rule called mark-to-market – which can have the paradoxical result of making assets be worth less on paper than they are in reality during times of panic.
Collective delusion – or a belief on the part of all parties that home prices would keep rising forever, no matter how high or how fast they had already gone up.
It is definitely a combination and cooperation of various events and people that has resulted in the economic crisis. Even if one of these causes for the crisis thought about integrity, the situation would have been different if not better.
Swathy
I really enjoy how you listed all the factors about the economic crisis. You included a LARGE list of how and why the event occured and it was very informative
BUT: why are you posting at 3:29 AM, That is sleeping time (just kidding)