In 2005 I was spending one month in Cambridge, UK, where I had the chance to meet a journalist from NY City and a lovely girl from Florida.
The journalist was very upset about the situation in the US as they were, according to him, turning from a liberal democracy into a socialist oligarchy: “We have fewer companies, the power is in the hands of few banks. I am not a communist and will never be. But I don’t recognise my country anymore. Where are the liberals? Where is the FREE market? This is a socialist country!”
The lovely girl, on the other hand, was very happy about her country. She was 24, she was enrolled on a bachelor's course and she was an entrepreneur: “I have three flats. The banks financed them; I did not put any cent into them. I buy and rent them. Since the house price is going up I sell them after 2 or 3 years and I can make a lot of money. Look this is the picture of my new mercedes, do you like it?”.
I think in the US everything is easy. One can easily make a lot of money, can easily have a fast career, can easily make very important friends. But.
But the same one can easily loose all his money, can easily get fired and can one day, end up being very lonely.
And this is what I think happened in the US.
Few big mortgage companies/banks have been able to play on the edge/outside of the rules, with a complacent government and a complacent security institution.
People who were scared of the situation have been marked as “communist against the free market”.
People with no skills or experiences thought that being an entrepreneur means riding a wave. While being an entrepreneur means adding value in whatever activity you do. And which value do they add if they were just buying, renting and selling?
As easy as the access was to the credit, it has also been easy to loose all the money gained in the real estate market, in the stock market and so on.
This is my analysis; but if you are looking for a more rigorous one, please click here.
What’s next?
1- This is not the end of the United States of America. But it is a new phase, with new protagonists rising up (China, India, Brazil, Indonesia, Vietnam etc) and others coming back (Japan and Russia). With these players joining the global scene, the market is expanding. It is not going up or down. It is just getting bigger, which means that it will go up faster and down faster. We should get used to daily double digit gains/losses. Nowadays we are in a period of double-digit losses.
2- This is not the end of the free market, this is just the end of the greed attitude that comes from the Eighties, the yuppies generation. It’s time for less Gordon Gekko (Michael Douglas in “Wall Street”) and more Oscar Schindler (Liam Neeson in “The Schindler's List”), more social responsible entrepreneurs and investors. The Eighties are over!
3 – This is the beginning for some Young People. It is time for us to take more responsibilities and to be protagonists. If we want to get into the field we have to do it now as a lot of companies/ industries /nations are restructuring themselves completely. It is much easier and much cheaper to join the show now, if some fields are starting from zero than it’s time to get involved!
A last remark: business, finance and economics are the sciences who developed the most in the last Century. Why has nobody been able to foresee what has happened?
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