Why The Global Financial Market Matters :Introductuion
In 2008/9, the world experienced the worst economic crisis since the great depression. The crisis was caused by a combination of factors including increased leverage and financial products such as mortgage backed securities and credit default swaps.
This year, investors will commemorate the tenth anniversary of the financial crisis. While a lot has changed since then, one of the most important things that has remained the same is the hatred of wall Street. In the last election, the candidates were vetted depending on the candidate who would be tougher for the Wall Street.
Several reports have been written since the crisis and the hatred for Wall Street has remained the same. People blame Wall Street for the crisis. To a larger extent, they are right. Furthermore, it is Wall Street which came up with the products mentioned above. And, when the crisis came, it was Wall Street that received bailout money.
Therefore, to a large extent, people are justified for their hatred for the wall Street. However, people should also see the benefits that Wall Street has done for the economy.
First, the United States is the most advanced economy in the world. It is a diversified economy that makes most of its money from different sectors such as finance, energy, and retail. These sectors employ millions of people. America is also home to leading technology companies such as Facebook, Google, and Twitter.
The fact is that without Wall Street, these sectors would not be as vibrant as they are today. This is because Wall Street is made up of the risk takers who risk their capital. For example, when companies like Facebook were stated, the founders were not wealthy. To build and scale the companies, they reached out to venture capitalists who risked their resources. They didn’t know whether the companies would become successful.
After building the companies, they had to exit and to do this, they went to Wall Street which invested billions of dollars. Larger investors and the public invested billions of dollars to the companies. Today, technology companies like Facebook and Google have become successful mostly because of Wall Street.
Second, Wall Street – and the financial industry in general – provides the best showcase for capitalism. One of the reasons why Wall Street is hated is because investors tend to advocate for cost cuts. In this, they advocate for companies to lower their costs by reducing the number of employees. While firing people is often a bad thing, the reality is that investors’ intention in all this is to build better and more productive firms where people are compensated for the work they do. Firms that don’t do this end up being bankrupt or out of business. Therefore, Wall Street is the best example for capitalism.
In short, while the financial market has made its mistakes, the reality is that the world is a better place because it exists. It has allowed people from all walks of life to participate in the financial market and make a living. For example, without Wall Street, it would be impossible for ordinary people to make money from a company like Facebook. Wall Street has allowed this to happen.