Behind the backdrop of Financial Crisis

While people are doing the mudslinging and playing this blame-game of what is to be held responsible for the current economic debacle... if you really see in detail people currently criticize things like Derivatives market regulation, Hedge fund regulation, Credit Default swaps, Mortgage backed securities etc etc.... When everything was going alright no one seemed to pay any attention to these things ever. This gives a rise to the question that why these things are ignored when all is going well.... one answer could be that the generation of wealth because of these things probably at the time of normal economic conditions must be at least at a level people don’t even want to consider giving a thought to these things and its implications if those go wrong ever. Won’t it be interesting then to compare the wealth created by such products for society to the cost of fallout if it ever fails?

 

I get a feeling that this study could be based on a wide every day perception of general people that " if advantages of a system are more than the disadvantages of it we tend to settle for the advantages offered often ignoring the disadvantages..." and the risk they pose which seems very remote and distant possibility as of now....and in a way we (the very society deriving benefits out of the prosperous economic conditions) lay a foundation for the doom day..

 

Imagine of it as the plastic waste we are creating today....plastic is cheap.... and so convenient to use.... and offers so many advantages than the apparent disadvantages... So while deriving these benefits we deposit our share to the foundation that grows in size and strength little by little....a foundation for a mammoth disaster that has a potential to devastate us but we hardly care about it as long as we are all happy today...

 

It would be interesting if we can choose 2/3 such products like say currency products of a hedge fund....and credit default swaps of insurance companies and carry out a study of wealth it has created for an average investor within a time period....and now after it has hit back in a form of crisis....the cost of such a disaster to that same individual.... we can possibly establish the rationale behind such a behavior which leads to such a crisis situation....