In the October 26, 2008 issue of the Business Week Turkey, Serdar Turan quoted in its column the comment titled Seven Deadly Sins of James Cooper, the head economist of Business Week. I want to share this comment with you. Below are seven sins that created the actual global crisis that is expected to last some time:
Gluttony: The collapse of the economy blown by the financial organizations, which continuously collect and keep the earnings created by feeding their funds in financial markets with virtual instruments instead of using such funds in real economy.
Greed: Trying to get everything. Pushing the risk concepts to the last point for the sake of more fictitious revenue and by creating meaningless instruments.
Sloth: Companies, when investing, place their assets and savings to hardly understandable games instead of placing them to production side. Nobody tries to generate added values. Virtual wealth transforms to real consumption. And financial organizations forget their principal basis of existence and look after short-term earnings.
Lust: Encouraged by the virtual wealth, consumers purchase whatever they wish. Driven by a crazy passion, they fill their home with plasmas and TV sets, second and third cars. People feel that they can afford to buy anything shown on TV. The world of finance cant harness its passion for profit. Its so ambitious that it can sell the natural resources of Africa, by transforming them to securities but without even to open a physical mine.
Envy: A fund management, which sees that another one makes more money by taking more risks, may lean to more aggressive investments. The jealousy also leads individuals to spend more.
Pride: Nobody cares warning and signs. Crisis predictions and warnings are neglected, relying on risk management structures controlled by IT system or experiences of super successful fund managers etc
Wrath: Impatience and wrath make difficult to behave logically. One of the banks is left to get bankrupt, while others are rescued. When people notice that they are not as rich as they believe to be shows their anger to the system builders. The wrath triggers the rescue packages.
Hoping that the New Year 2009 restructures the global financial system with an emphasis on the production and innovation, taking necessary lessons from these seven sins, I wish you a happy New Year and hope that this New Year will bring success and health to our whole nation.
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