Whether you had your money in shares, superannuation or property, the result seemed to be the same. Your assets were devaluing every day and there is very little you could do about it. Finance companies, then Investment banks and now some banks had collapsed and others had been bought out at bargin basement prices.
The Money Morning report 28-12-08 www.moneymorning.com said "The Dow Jones has lost almost 42% of its value over the last 12 months. The S&P has lost almost exactly half of its value ... and the NASDAQ is down more than half over the past year. And that's just the financial markets. The housing crisis has snowballed into a disaster of biblical proportions - taking out banks, investment firms, insurance companies and other major corporations. And it's gaining momentum every day.
Billions of dollars in wealth... vanished... right in front of our eyes.
But this crisis is more than just numbers.
It's about retirement accounts obliterated. Home equity slashed.
It's about millions of investors who played by the rules. Who thought their retirement was secured. But who woke up one day to find the rules had been changed on them....Your future is under constant assault from these runaway economic forces...but how can you protect yourself and your investments?
WHAT CAUSED THIS CRASH TO HAPPEN?
It started with the financial deregulation brought in by the New Right extremists of Britain under Thatcher, America under Reagan and New Zealand with Roger Douglas as Finance Minister. It didn't take long to show that if the markets were allowed to run free then they would run to excess and in the mid 1980s the first crisis caused by this deregulation hit. The central banks simply flooded the system with more money which eased the problem temporarily, by while the financial markets continued to be deregulated the instability continued. A series of crisies followed deregulation. 1987, 1990, 1998, 2002, 2008. What was the Governments/Federal Reserves answer to all of these? They either pumped more money into the system, bailed the institutions out with taxpayers money or cut interests rates. In the case of the 2002 crisis interest rates were cut from 6.5% to 1%
The end result of the central banks coming to the rescue of the market is that the Risk Investors began to feel they could never lose and were prepared to bet more money than they would have normally. The New Right financial deregulation has put the world economy at risk while the risk taking CEOs of failed institutions walked away with millions of dollars in their pockets.
For many years economist Lyndon La Rouche has been warning of this very thing happening, in 1995 he designed the Triple Curve Function which makes clear the economic process afoot. On October 20th 2008 he declared "What the world is going through is not a financial crash at all, but a far more devastating disintergration of the entire global financial system."