Ewan Hampson (2/17/2009)
jgrubb (2/17/2009)
Finance, however, may be the killer. By it's nature, it runs on a fairly thin margin of equity to capital....
The trouble with a lot of "Finance" is that it doesn't make anything or generate anything apart from a virtual growth in virtual assets. People make deals based on bets that values will go down or go up, and trade in currencies to take advantage of differential exchange rates, in a sort of creative accounting bonanza. But they're not producing anything at all.
Just my two-penn'orth.
True, but it is necessary. For someone to produce something, they often need to get a loan/investment to do so.
The problem happens when the financiers confuse themselves with producers. Without the production of something, all the paper and stock and loans is worthless.
The current bust happened because too many people became too reliant on the increasing property values. "Manufacturing" value without effort. It became a giant pyramid scheme, and they always will crash. The valuations of the property was the fuel. Because people do not know or understand history, it happened again.