Real eatate prices rose significantly, not because of the usual supply and demand but because of greed. People paid inflated prices for property not based upon it's actual worth but what they could onsell that property for. People lived outside their means on cheap credit, countries borrowed significantly more than their GDP figures could withstand, companies bought debt off other companies because they were greedy and could see big profits for themselves. Much like property, oil prices rapidly rose, again not because of supply and demand but because of speculators who believed they could make money. There was no shortage of oil. There won't be for a long time.
Did anybody serious believe that this bubble wasn't going to burst? If not you should have. While there are probably economists who strongly disagree I think you can compare a free market to Darwin's theory of natural selection where the strongest will survive and the weakest will fail. A bad business model can only last for so long before it gets wiped out..
Like a big night on the town the hangover is here for the greedy people who drank too much of the free booze.
Those who were smart shouldn't have to worry too much to worry about because you're probably sitting back smiling and saying "told you so" to everybody else.
Other related posts:
United Airlines pulls out of New Zealand for Southern Hemisphere Winter – AKL/SFO becomes seasonal.
Air New Zealand launches Flexitime Membership (and how it can save you $$$)
Have an interest in retail payments and credit card interchange rates? Here’s your chance to have a say.
Comment by barf, on 20-Oct-2008 17:03
much like the world's economy, i drank too much on friday...
but on a more serious note, the fear card is being played to sway votes, most notably by the National party. election year here and in the USA so there is alot of nonsense to dispell.
prediction markets suffer from fear more than commodity trade markets, ie oil is being traded more, along with gold, while the sharemarkets are less likely to guarantee returns.
Comment by tonyhughes, on 20-Oct-2008 19:45
Comment by kiwitrc, on 21-Oct-2008 09:28
Yeah dead right BARF, the National party playing the fear card has caused the rest of the world to panic and foreign governments to inject billions into their financial markets. Naughty National Party!
Add a comment
Please note: comments that are inappropriate or promotional in nature will be deleted.
E-mail addresses are not displayed, but you must enter a valid e-mail address to confirm your comments.
Are you a registered Geekzone user? Login to have the fields below automatically filled in for you and to enable links in comments. If you have (or qualify to have) a Geekzone Blog then your comment will be automatically confirmed and shown in this blog post.