The economic melt-down, caused from the stock market crash, was something that was,
In the past, investors were inclined to use the stock market for relatively safe
long-term investments. Today, however, the attitude of investors has changed. Driven
by greed and ambition, investors today are looking for a quick return. For this
reason, these days, investors are willing to gamble on ‘high risk short-term’ investments.
Business has also embraced this attitude on a global scale. Major companies have
led the way and shown that offering a lucrative remuneration package to a high ranking
CEO can significantly increase the company’s profit margins. These multi-million
dollar CEOs make the
ruthless decisions on behalf of the Board Directors,
Owners and Stockholders and get immediate results. Retrenchments, relocating business
off-shore and clever marketing strategies have dramatically impacted on profits by
slashing overheads, renewing the company’s image and attracting new business.
These highly paid and clever ‘spin doctors’ are looking to make a significant impact
in the short-term. Rising figures on the stock market prove that the company’s profit-boosting
strategies are working and, in this way, reel-in the small investors low income-earners
Unfortunately, those who are least able to afford the ‘high-risk’ are willing to
mortgage their home or use their superannuation and gamble their life savings in
these ‘high-risk’ ‘short-term’ investments also to make a quick return.
The problem with this trend is that the economy depends on the actions of a vulnerable
and inexperienced investor. This small investor, however, who has life savings riding
in the balance, is easily ‘spooked’. The changing highs and lows of the stock market
can quickly panic such an investor and a knee-jerk reaction: withdrawing investment
moneys from the stock market, can cause an economic crisis, in a short period of
time. Consequently, a great deal of money, homes, superannuation and life savings
can easily be lost in moments, due to the reaction of this emerging ‘vulnerable and
In the past, those who used the stock market were investors who were more financially
Today, business has also adopted risky business practices. Selling their debt is
a practice which works well for them when the market is good, however, not so well
when the market is down or volatile. At that stage, not only is there a debt by
the business, but now, in a vicious circle, this debt has doubled and the insurance
company also has lost their money.
Recently, governments around the world have stepped in and bailed out big business
and banks in an attempt to save their economy from total collapse. If business and
banks do not learn from their mistakes, next time governments may not have the money
to bail out their countries.