Stock market crashes. Falling oil. Greek debt. Currency wars. Deflation. Wage stagnation. Poor quarterly corporate results. Record bank fines on everything, from forex trading to rate manipulation. Anything else missing? Oh yes, there is the upcoming US Federal Reserve interest rate hike expected for September.
2015 will probably go down as one of the worst financial years since the start of the Great Recession. That was in 2007. The reminder is necessary because no one seems capable of remembering that far back. Certainly, no one seems to remember the lessons that we were supposed to have learned then; such as the need to avoid unnecessary risk or not lending money to those who are not credit-worthy. It is basic stuff.
The only thing we do seem to remember is how to perpetuate a never-ending cycle of greed followed by panic. It seems that every time we make the move from panic back to greed, we think we will not forget this time. We say we certainly will not make the same mistakes. Worse, we think we can use our new-found knowledge to make up for our previous losses. In other words, we double down. That type of mentality is what drives Las Vegas casinos and as anyone who has ever spent time there knows, a bust is inevitable.
In short, global financial markets have learned nothing since 2007. The ongoing stream of economic crises the world has faced this year are a direct result of that. People muttered then that it was hard to imagine that in only 80 short years we would forget the lessons of the 1920s and the Great Depression. Now, we have managed to forget again in eight short years!
Is it really necessary to start talking about heavy market regulation? That is what is coming next unless we learn to control the greed on our own and no one wants that. If the governments around the world start to intervene in the markets, then the one sure thing we can expect for the next 20 years is slowed, albeit controlled, economic growth, similar to what followed the Great Depression. No one wants that, but unless we learn to remember our own mistakes, it will be the only way to stop this cycle of market mayhem.
