The Arrival of a New Age

The financial crisis that originated in the United States spread around the world like wildfire. In just the second week of October share prices plummeted by 50% worldwide, triggering the kind of economic crisis that is said to occur only once in a century. Even now, the economy is in recession. Government leaders have begun frantically searching for countermeasures, but observers are saying that it will take several years to recover.

The main culprits who brought about the economic crisis are market fundamentalism and the hedge funds. These people only make money by controlling the swings in share prices and commodity prices, and in the end it was they who caused the world economic crisis.

Even before the crisis actually occurred, the subprime loan problem in the United States was having an impact on finance around the world. At the root of this problem were hedge funds, which make profits by scalping. The hedge funds directed their money toward crude oil, pushed up the price of crude oil, and caused a rise in the price of other materials as well, thereby plunging otherwise healthy manufacturing industries into despair. The hedge funds measure corporate value in terms of return on equity and make a quick buck from short-term market fluctuations.

What the latest economic crisis means is that the economy is shifting from market fundamentalism, which makes it easy for these hedge funds to secretly maneuver, to a form of capitalism that reflects the real economy. The difficult period is probably going to continue for a while, but I sincerely hope that this new form of capitalism will be realized and that hedge funds and the like move in the direction of regulation.

Incidentally, looking at companies that have been caught in the latest financial crisis, we see that while the American International Group (AIG) was rescued, Lehman Brothers was not bailed out. These are both global companies employing several hundred thousand workers, so their bankruptcy would be sure to have an enormous impact on the whole world.

The people who used Lehman Brothers were investors; naturally, hedge funds were the company’s main clients as well. The mentality of investors is to put priority on their own profits rather than thinking of others. That is the common practice, so the response is to tell these people to take responsibility for their own speculation. It would be outrageous to come to their rescue with taxpayers’ money. By the way, it is probably still fresh in readers’ memory that when Livedoor made a move to purchase TBS, it was Lehman Brothers that arranged the funds. Lehman was acting like a real hedge fund at that time, and its eventual bankruptcy is only natural.

AIG, on the other hand, is a life insurance company. People take out insurance for the future and seek peace of mind, so it would be catastrophic if this firm went under. AIG was rescued by the government’s policy of protecting individual deposits and insurance.

The world economy is probably going to become even more severe: slump in personal consumption?decreased sales?decreased production in factories?a further decrease in sales?bankruptcies, layoffs, employment instability, a rise in the unemployment rate?consumers go on the defensive?a further slump in personal consumption?a worsening of the real economy.

As a result of this chain, the economy is certain to be in the doldrums for a while, and it is necessary to quickly adopt countermeasures that take account of this situation. In particular, the nosedive in share prices strikes a direct blow on the disposable income of the rich, so the impact on expensive goods could be considerable.

In these circumstances, the digital household electric appliance business is perhaps in a somewhat fortunate situation compared with other industries. Eagerly looking forward to the arrival of an age that has its feet firmly on the ground, I hope that we can enliven the year-end sales campaign.