happened and there are a canister peninsula since the 13th century. up next on the news eco in the elbow said how both top solar units are helping power indiana homes always morna website w dot com i'm sorry kelly in berlin thanks for watching. we're all set to go. as it should and will. take on the. call about the stories that matter. to. the. fire.

hydrant in. the midst. of. this upcoming chapter. and to me credit cards. result told on punch up the phone ted. noffs. yeah. like the ball. was. something that the family. to know. was you know you must you know.

do you also believe that your credit cards a cursed and this an all powerful financial sector controls our existence jerk off shelves now gone down. to. the overwhelming might of the financial sector is increasing and more crises are on the way again we are not on. the good left now. downs in the in this case did the financial sector and the real world continue to drift apart so the next crisis will likely be worse than those that came before at least finance and up becoming the monster of the economy the servant how could you not the fact that the way in which tens of millions of people are struggling to misery and unemployment and the banks

which guarantee the jobs of the time you were subject to such generous rescue. even future crises look like it's impossible to say but a crisis always hits the weakest the hardest. and if it is this the end things don't look so good. this is the story of a divorce the end of a marriage of convenience between the financial sector and its customers between average people and bankers over the last few years trust between the 2 sides has declined and they are further apart than ever but the financial sector is still doing business as before and its influence on the global economy continues to increase. many believe that this imbalance is risk. dunstable for the numerous

crises that plague us today. the 20072008 financial crisis and the austerity policies that followed political crises that have shaken democratic societies and the climate crisis that's now making headlines. the financial sector controls billions of dollars so far that can have a serious negative impact on large numbers of average people. has the financial world taken us hostage. when did politicians lose control of the financial system and will we be able to deal with the next crisis. let's see what sort of options are available and alternative system is not only possible it will be essential if we are to master the challenges that lie ahead.

as finance esteem the financial sector is enormously important for any economy. think the financial system is a human parties to be tougher to resources to look white blood cells are saying all kitchen and nutrients from one part of the body to the office nearest office i mean they distribute these materials throughout the system on one by one of guns a couple a tight. seal of the us could work. if you know the original function of this sector was to finance a country's economy. and to provide support for individuals companies and institutions in times of financial difficulty who. let's say your car or refrigerator breaks down if you. i don't have the money for

a new one you can barely get through the primary task of the financial sector is to make that money available in addition it also promotes investment into production some of the profits that results are then used to repay that investment so the financial sector helps people and businesses to invest for the future that's one of the fundamental in very positive aspects of a market economy. there is no finance without credits and no credits without a bank. the good old bank advice is they manage all savings and provide us with financial advice and support for. you for the understand how a bank works today we have to move away from old ideas or worse winks don't just manage the money of average people and then lend it to investors who take risks and he said i hope that other banks borrow money from other market institutions or reinvest in my ship retail with that so banks have become more and more dependent

on the financial markets system broken so she also is and as a result banking has become more unstable more prone to who lives of crashes. or find a banking sector now has a larger presence in our society than it used to count of new book percent kind of the necessity finance in the 20th century came in and in itself essentially money started moving and these never ending lives and finances became made money by using money to make more money should. should get into. national. asia and. called if you just let bankers and financial experts do what they want the same thing always happens they compete with each other and take huge risks that creates a speculative bubble then the bubble bursts and banks run out of money and stop lending to businesses and. zoomers can't get the loans they need loans are the

lifeblood of the economy and if that blood stops flowing there will be a collapse. in other words the financial crisis just. helped prepare for future crises it can be helpful to take a closer look at the past. the 1st major documented financial crisis was the so-called q-tip mania in holland during the 17th century lips had recently been introduced in europe and became quite popular a speculative bubble developed when future contract prices for chile bulbs went through the roof. the value of a single to that bulb eventually reached that of in succession account several pigs a mansion and finally. speak the speculation continued until feb 16th $37.00 when the bubble burst of brutally people figured

out that it was insane to pay that much for a $2.00 level so they stopped buying it and the price collapsed to. boom and bust cycles came and went regularly over the next several centuries but they always followed the same pattern in a financial wizard discovers a new way to make money the speculative bubble forms and then bursts and the financial crisis follows speculation in stocks led to the wall street crash of october 1929 which in turn signal the start of the great depression the us unemployment eventually reached nearly 25 percent the president at the time franklin delano roosevelt sought to restore confidence by regulating the financial sector including the banks to serve the if you don't like a well regulated financial sector well hope to keep an economy stable and what you do you have sick from the 850. until today there were numerous financial crises in

various countries around the world with one exception there were almost none between 1945 and 975. why is that. because all countries followed roosevelt's example from the 1930. they imposed regulatory measures on the banks both at the national and at the international level. when the so over a period of about 30 years there were almost no financial crises 0. so everything was fine order was restored in the financial markets economies were stable and citizens could enjoy the benefits of prosperity. that is until the global financial crisis of 20072008 banks extended credit hand-over fist politicians to the other way. bubbles forms.

what was happening in finance before 2007 was that you had a tiny tribe of specialists who controlled a technology that nobody else understood it to do with the repackaging of financial instruments. and this they had sole control of this technology and this knowledge and because they spoke a language which was completely uncomprehensible to anyone else i used to say they spoke financial latin the priests in the medieval catholic church and because this language and this knowledge was making them very rich they became incredibly arrogant and incredibly dominated by what i call tunnel vision they simply couldn't see out of that tiny little worlds and couldn't see the consequences of what they were doing if you'll see the. your methods are so complicated and then

comprehensible about the regulators just let them do whatever they want to talk you it prefer. traders used to practice called securitize ation just so packages of debt including s.p.f. these c.d.'s and c.d.'s has many were based on some prime mortgages the market soon became flooded with these debt products and eventually collapsed but how exactly did that happen how did these the wolves of wall street get away with it had to jump onto the train to sit if you design is in the 1970 s. the theory of official markets became increasingly popular. it says essentially that markets should be allowed to regulate themselves. according to this theory markets will operate more efficiently because those who actually work in the financial sector know the markets better than the government regulators the. priests. even the most. lawyers. or

in law firms all the students that we teach for a long time and fallen for the belief so the goal was to make markets more efficient the goal was to ensure that shareholders and corporations can really control what's going on and so if you give them all the right incentives the right outcome will happen. but that didn't work. because these periods of euphoria and crisis are based on a kind of collective irrationality. the financial players are no longer able to work out solutions among themselves so outside intervention is required in just abusive issues. in the subprime mortgage crisis shed light on a dark corner of the financial sector traders for making deals that were so risky that they threatened the u.s. economy. the u.s. and europe were rucks by this crisis those responsible were facing possible

criminal challenges around the world leaders who've done little to prevent the collapse then promised to steady the ship. we brought the global economy back from the brink we laid the groundwork today. for long term prosperity as well as long term prosperity is an ambitious goal even in the best of times the leaders agreed to ban extremely risky transactions and ordered banks to increase their emergency reserves. and that top priority was to rescue the world's banking system central banks would play a key role in this effort. the u.s. federal reserve fired up the printing presses pumping more money into the ailing economy. 1. 100 citizens to the song central banks in their current form have only been around since the end of the 19th century

said that us 30 did the player primary function is to keep prices and currency stable and to guard against inflation and stock market crashes. not central banks or the link between politicians and the financial system in the states so. these institutions regulate that system so that it doesn't exert too much influence on society. the european central bank started lending huge amounts of money to individual banks because they were too nervous to lend to each other. and while the e.c.b. dealt with this situation more trouble appeared on the horizon. you know it's. in europe the global financial crisis was followed by a 2nd emergency and this involved the european currency system so it exposed weaknesses in the financial system as a whole and problems with sovereign debt in particular those figures and. it

started when greece revealed that its finances were in worse shape than previously thought to. this crisis spread throughout the eurozone and raised serious questions about whether the common european currency could survive. but investors and italy spain and even france panicked and tried to dump their government bond that also has meant. president mario draghi then made a policy statement that would become famous. draggy soon became known as super mario for his role in dealing with. the crisis he dismissed speculation about the end of the euro on the silver and see if individual he you countries. within our monday the z.b. is ready to do whatever it takes to preserve the euro. and

it will be enough. people do whatever it takes to get the 2 of us not finishing the job he promised to take all necessary measures to protect the iraq trying to put an end to speculation in the financial markets so for him donald social politicians would fail to stop it so the e.c.b. had to step in to try to keep things from getting even worse and a few t. shirt is something that. is not against it was a highly unusual move and some e.u. states criticized it especially germany there were questions about whether this decision was compatible with the e.c.b. mandate but others said it was the most successful monetary policy measure ever because it calmed the markets and the policy itself was never fully implemented that's what's so unusual about it. and. i look. by law the e.c.b. does not have the right to finance government at the time druggy said i'm not

financing sovereign debt i'm buying promissory notes from investors but he was obviously financing the sovereign debt of e.u. states through the e.c.b. his goal was to curb inflation and promote economic growth and create jobs. but. to sum it up the central banks in europe and the u.s. spent huge amounts of money to pay out the banks and restore some order to the financial sector. and what was the result did all that new money strengthen the global economy it did not in fact it did the opposite. government debt as a result of the crisis central bank balance sheets will never look the same again interest rates of plunged to 0 we have the threat of visit with the zombification of a large part of the corporate sector which is being kept alive by extraordinarily low interest rates and growth rates and productivity rate the growth rates of all

fallen very considerably since the early 2000 and really quite dramatically since 2008 and so we're left with this deeply uneasy sense that we don't really quite understand the world that we're in we know it isn't the apocalypse but quite what kind of world it is is is very unclear. and there are fears that a new financial crisis may strike soon because real reforms have not been imposed by you additional is more hard to. do and there have been no major changes in the way that banks operate you know serious changes in the structure of the financial systems to see them feel the same situation that led to the financial crisis of 20072008 is still in place on fits no one is address the problems caused by financial imbalances. so instead of making a fresh start the politicians just poured more money and financial instruments into the system of ican call. them as you know one of the measures that were taken did

not go far enough in the most important they did nothing to address the growing divide between the financial sector and society as a whole the point that is so now part of that sector no longer serves society but pursues its own interests exclusively and the point. that. many average people feel betrayed that tax money helped to bail out the banks but consumerists got nothing in return and. the losers are the populations of europe in the unite. it states which suffered the immediate effects of the fallout the $10.00 to $11000000.00 american families that lost their homes this is the largest forced movement of americans since the dust bowl of the 19th thirty's and in the eurozone even more cutely the millions of people who were

driven into unemployment between 200820132014 where government policy really failed to respond in a way which would have enabled them to escape. in this if you will don't realize how much the financial sector affects their lives they may experience some aspects of it but they don't realize how much damage a financial crisis can do but we keep having these crises because no one wants to push through reforms and we all pay a price for that to get only to see. why has our financial system become so unstable we seem to have learned nothing from previous crises the regulators seem powerless to fix things and the next financial disaster could already be in the works. after the financial meltdown of 207-0008 the politicians focused most of their efforts on regulating the banks but other sectors of the economy may be on shaky ground as well now to the use of warden bank.

after the crisis the authorities imposed strict regulations on the banks this was expensive and time consuming for the banks so a lot of them shifted some of their transactions to non-bank institutions where there's less regulation and. the glyphs happen banks and sick this is called the shadow banking sector but that term is misleading these non-bank companies don't really operate in the shadows they include insurance companies and investment funds and they pretty much regulate themselves. as shadow finance. the system where trade is far from the prying eyes of regulators by all kinds of financial products. in broad daylight. the shadowy financial sector has become

a bit more transparent in recent years but here huge sums continue to flow into it . a lot of this money is parked in tax havens which are often difficult to trace. gives out or tax havens are opaque no one knows how they operate or how they finance themselves jacks havens create more risk in international finance and that can lead to instability if you know one of the ironies of what's happened the last decade is that the crash of a banking sector was a crucial reason why the last financial crisis happened and essentially you'd think that because of that and the year is off the crisis regulators would have shut down the shadow banks and there was some decline initially but in reality the shadow banks always becoming more not less important to. the regulators do more to rein in they find natural institutions. own said to

that question it's complicated. there are several reasons why it's so difficult to impose reforms in the european financial sector finances the 1st financial institutions have to be able to compete on a global basis. in france or germany people no more startling in the u.s. why usia just market strategy accordingly so that they can compete effectively and cottonwoods in the u.s. we're seeing a trend towards the easing of regulations on but. this would allow them to take more risks which would give them an advantage over european banks which your monkey . boller so we need a global solution i live on. banks and other financial institutions should play by the same rules apply the course will be much you know the 2nd big problem in europe is the financial sector lobbyists have a powerful influence on the politicians will be. enforced but.

at the european parliament in brussels there are 3 times more lobbyists than politicians these lobbyists are often recruited at handsome salaries from governments around the private sector so they know quite well how the game is played. when politicians at the national or european level are writing legislation there's a lot of input from experts and when it comes to legislation that affects the financial sector the experts are often people who work at banks or investment companies of all financial institutions consider themselves quite innovative they keep coming up with you ways to make money and they're often one step ahead of the regulators to draw that. let's be honest average folks tend to take the word of experts face value that's especially true when it comes to the

financial sector most people don't take the time or make the effort to understand what's really going on that needs to change. first of all we have to take the mystery out of finance it has bankers and others have to stop using jargon so that average people can understand what they're saying and doing. the financial sector has to become more transparent he said and then yeah so thunderstorms. today more and more people are taking an alternative approach to finance. they generally opposed to the big banks and they encourage people to learn how the system works. or felt. 6 6 they had surrendered isn't working on that and also little by little people are trying to take the mystery out of the financial sector. are trying to approach the

subject in a way that's more interesting and less technical. and wanted to do many of. these problems you know. that and also the fact the financial sector affects the lives of all of us our environment our food our health care system and our children's education and that's why we need to have a say in how that sector operates we have the right to demand accountability from these people more. than. what is. your bill why do the euro kratz and the politicians in the brussels bubble behave the way they do why do they make policy decisions that seems completely absurd to us. they all stick together and

a very often don't leave that european bubble at all so they have no contact with the outside world then ok maybe that's why their policies seem completely detached from reality. or. to the words banking and finance legal matters people feel insecure but good. they don't understand the technical terms and they can talk about it with any level of expertise. but we have no choice we have to get involved with the financial sector and as quickly as possible future developments could have devastating consequences for the global economy for example there's been a big increase recently in social inequality. many middle class here opinions and americans who were hit hard by the last financial crisis are still angry about it.

is this sense that this is no longer economic system that can really maintain the plausible fiction we're all in this together basically. and that economic growth raises a standard of living in a way which is broadly speaking similar that's just a counter to fact as an experience of the last 20 to 30 years so if you don't follow christian ourselves or the new set. put the 20072008 financial crisis fueled the protests in the political anger that are spreading across europe today. because those who caused the crisis actually benefited from it. the huge amount of money that was pumped into the markets not this market this one did not stimulate the economy it just prompted more speculation.

who live in countries like greece spain italy or ireland are growing increasingly angry there was a harsh austerity measures that were imposed there into the eurozone debt crisis. then there's you they can be tied you can hear them is always countries accepted those measures in return for loans from the e.c.b. and other e.u. countries to help them get their economies moving again. so the bank bailouts added to the debts of governments corporations and individuals . it also undermined the confidence of average citizens who signed it earlier and that's one of the big lessons of the global financial crisis just once and banks and investment firms took big risks they said if it goes well it will make a huge profit.