Today marks the end of an era. Less than a year ago, five American investment banks were marquee names on Wall Street. Today none exist!!
Bear Stearns went to JP Morgan Chase. Lehman went up in flames. Merill Lynch went to Bank of America. And today the last two, Goldman and Morgan Stanley have been allowed to become 'Bank holding companies'.
And among the Big Five industries, Mortgage, Insurance, Mutual Funds, Investment Banks and Commercial Banks, only the last retains a modicum of respect and customer confidence. So is this the failure of capitalism? Should the world embrace that abomination called Socialism and rein the market forces in with stringent regulation? Obviously no. But that discussion can wait.
I think the root cause of all this turmoil is the greed of the middle class. And worse, the governments especially the socialist ones seem to be actively encouraging this middle class rat race to procure gaudy wealth. Lets take two examples.
Credit Cards: Why on earth does any one in India need a credit card? There is no such thing as Credit history here. So for most people credit cards only have a nuisance value. Ofcourse there are some morons who spend nearly all or over their monthly salary and need Credit cards to get them close to the next pay day. How many people who use credit cards today would take a personal loan from friends? Credit Cards take away the shame associated with hand-to-mouth loans.
Housing Loans: I have never understood why governments should offer tax incentives to people who are stupid enough to spend money they don't even have. One can understand if the government encourages people to save. But tax breaks to spend?! And this, when every employee's house rent is actually paid by their employers as HRA. Weird, ain't it?