It has been believed by some of analysts that currently we are standing on the edge of a bear market of epic proportions
. And the main reason for this is the huge levels of debt underlying the overall economic system of the world and it would shortly unwind in a deep and persistent manner.
Analysts are not too certain whether it would have the same effects as the decline of Japan from 1990 to 2003 that was followed by the bursting of credit bubble in the region or it may be very similar to that 15 year flat spot from the year 1960 to 1975 in the American Market. The situation would not play very similar to any of these two but it has been predicted difficult time with very majority of the people having liquidity crisis and financial engineering gradually and surely declining.
Instead of joining the crowd that has been blaming the mess on the United States slobs that was main responsible on more mortgage debt than they possibly would have afforded and have endangered the whole world by rigid creditors. The main parties involved for this entire are:
1. Regulators.
2. Hedge and pension fund managers.
3. Financial engineers
1. Regulators:
The reason why regulators are made responsible is that they stood by as different banks of U.S. created inventive however unsafe methods to shift trillions of dollars of credit risk and use off-balance sheet techniques that were very risky.
2. Hedge and pension fund managers:
The hedge and pension fund managers were responsible because they were satisfied on debt instruments that yielded good returns but were not understood by them.
3. Financial engineers
Financial engineers are made to be responsible because they were the main people behind building huge amount of securitized debt that were basically imperfect.
It has been said that these loans were created and originated with the intention that the hedge funds would have good returns debts to purchase plus the middle class of the United States landowners are being blamed however, they are simply a pawn in this scenario.