World Economy – and the Commission searched the turmoil

The Financial Crisis Inquiry Commission was created to "examine the causes of the financial and economic crisis in US. The Commission was established as part of the Fraud Enforcement and Recovery Act passed by Congress and signed by the President in May 2009. This independent, 10-member panel was composed of private citizens with experience in areas such as housing, economics, finance, market regulation, banking, and consumer protection. The Commission’s statutory instructions set out 22 specific topics for inquiry and called for the examination of the collapse of major financial institutions that failed or would have if not provide assistance from the government. On January 27 the Commission delivered its report to US president and thus operations of the Commission concluded on February 13, 2011.

The great Mirza Ghalib once wrote “the whole body has burned so the heart must have too; what are you searching for in the ashes, what’s your motive”.

In concluding the report the commission has answered Mirza’s question (just imagine, the length of time taken), It is an attempt to record history, not to rewrite it, nor allow it to be rewritten. The profound events of 2007 and 2008 were neither bump in the road nor an accentuated dip in financial and business cycles. From 1978 to 2007, the amount of debt held by the financial sector soared from $3 trillion to $36 trillion. The very nature of many Wall Street firms changed—from relatively staid private partnerships to publicly traded corporations taking greater and more diverse kinds of risks. By 2005, the 10 largest U.S. commercial banks held of the industry’s assets, more than double the level held in 1990. Nearly $11trillion in household wealth has vanished; people abided by the rules are out of work and uncertain about their future prospects.

The commission has concluded in its report, financial crisis was avoidable and the crisis was the result of human action and inaction. This notion was further intensified by paraphrasing Shakespeare “the fault lies not in the stars, but in us.” The report further concluded that financial regulation and deregulation proved devastating (it does not mentioned, regulations from US only or even BIS’s), dramatic failure of risk management and corporate governance were few more major reasons along with excessive borrowing, risky investment, and lack of transparency were mentioned. It also blamed government as she was ill prepared for the crisis.

Government could not even understood Alan Greenspan’s “irrational exuberance” or “conundrum” despite the fact that after the first one there was a blip in IT sector and the later resulted in subprime mortgage crisis. If you go through with the testimonies of AG, you will learn how difficult they were to pick. The lawmakers found it difficult to question him, let alone the blame for ill preparation.

Wait a minute, why am I writing all these? If you want to read the entire report you can at www.fcic.gov , I am writing this one because it is equally important to know that west’s financial system is nothing but exploitation and concentration of wealth. You must have heard the great Gordon Gekko of 1987 block buster, Wall Street saying that its zero sum game, someone profit is someone else’s loss. Question, who pocked the $11 trillion?