Financial Studies (Sep 2012)
The Financial Crisis, A Problem Of Economic Ethics And Of Morality?
Abstract
Many experts interested in explaining and understanding the deepness of latest financial crisis, far away yet to be solved, have gone beyond the appearances capture only by the economic science. It is more than sure that bubble on US prime rate real estate market was a only the detonator of much more complex mechanism built in time behind the scene of the financial system. Two things are more perceivable, the lack of comprehensive, but not overburdened, regulations and the sophisticated financial products less understood even by the managers of the financial institutions using them. A question still remains. Who was actually in charge with the explosion and the changing nature of the derivatives products, as innovation in every field of human activity is not always to be blamed? When the crisis burst, we were talking about toxic financial products with a huge capability to contaminate the entire globe. When the things became a little calmer, we started to call them exotic financial products and now it is a vague feeling of forgetting about the bad impact they produced, focusing ourselves on the new and more needed regulation of the global financial system, leaving aside the human behavior. What we see is that financial world became huge as compared with the real economy and, as a long time and well experienced former banker said, huge money are looking for more huge yields, producing more money out of nothing. That simple thought brings us to the ethic in economics and morality in the financial system, completely reversed from the normality, if just have a look to the anti cycle movement between the bonus policy and the losses or failures of some banks in the latest years. The connection is to be found in the risky management of the risks in very exposed markets to the information asymmetry, moral hazard and herd behavior. We let you know that this article is an inspiring root for an extensive study dedicated to the global money, in search of what we may call the preparedness of the world to think differently about the global financial integration.
