A year of wishful thinking..

This post is about the financial crisis. Wishful thinking is without any doubt one of the main causes.

Some people called the  period from March 2009 as the year of wishful thinking. Central banks cut interest rates and the governments started providing the financial economy with a flood of cheap money that gave the illusion of recovery. Or like they call it in the article: “Pouring a lot of water into a bucket with a large hole.”

Greece was the first country on the chopping block. There were damaging disclosures that Greece has used derivatives to manipulate its debt figures and markets began shorting Greece. Much of its debt is owed to investors outside the country, what means mainly banks and investors in other European countries. If Greece defaulted on this debt, then the resulting losses would have serious consequences for the affected banks and the whole banking system. Other countries, such as Portugal, Spain and Ireland , with similar economic problems are up next.

A problem of too much debts was being solved with even more debts what resulted in the economic situation we face today…

http://www.nakedcapitalism.com/2010/06/satyajit-das-the-year-of-wishful-thinking.html

Matthijs Vanrapenbusch