Overdose: The Next Financial Crisis
Many economists believe that the biggest economic crisis of all times is still on its way. This award winning film opens our eyes to what is really going on globally when it comes to the financial situation.
The story began on September 11, 2001 when the terrorists struck down the World Trade Center towers. They knew exactly what they were doing by attacking the very symbol of the global economy. Their timing was also well thought out; the Dotcom bubble had burst and the United States was already slumping slowly into a recession.
In the spring of 2001 the Federal Reserve began lowering interest rates to save companies on the brink of bankruptcy and keep unemployment down. This move fostered a bubble that threatened to explode soon. They knew that that was bound to happen; interest rate can’t be kept low for too long, otherwise people will end up doing things they will later regret.
This financial storm began when congress started pushing the idea of home ownership for all, even those who weren’t able to make down payments. To many, it seemed like a smart move: there had just been a terrorist attack and after all, nothing feels safer than owning your own home.
Low interest rates and cheap loans encouraged people who already owned their homes to buy bigger properties. Then the housing prices went up and many were encouraged to take out second mortgages to fund consumption. Cars, clothes, and vacations were at the top of their lists.
Then when the poo hit the ceiling, the government’s solution consisted on granting some of the biggest financial stimulus packages and bailouts ever seen in history.
The government’s strategy never really solved the problem. It was like giving alcohol to a drunk: it doesn’t help him get sober; it just sets him up for a bigger hangover. This is what happens when the government tries to protect investors and consumers from facing the consequences of their own decisions.
When a few experts predicted the 2008 financial crisis, they were laughed at viciously. Many stated that the predictions were too gloomy. We all know who was right then. The truth is that change is still possible, but it needs to be done soon because time is of the essence.