The Financial Markets finally felt the full impact of the Doomsday Cycle in 2007-08, in the backdrop of the fall of giants like Lehman Brothers, banks in Ireland and Iceland. To add to this, there were too many lending programs by the European Union and the IMF for countries like Italy, Spain, Portugal and others. Today, in 2012, many analysts believe that the worst is behind us. Others, however, tend to believe that the hopefuls are simply in denial mode. According to Booth and Johnson, the doomsday-like situation is now headed for Japan and America. They also expect it to hit Europe once again, and this time the situation could be much worse than before. Yet, the policy makers do not seem to have taken note of the way the tides are turning.

In the 1980s and 1990s, there was reportedly a deep economic crisis that prevailed in the low and middle income countries. However, these economies weren’t significant enough to generate a global impact. Today, the crisis looms large in relatively stronger economies; which is why it is capable of hampering growth all across the world. One of the prominent reasons for this is the huge borrowings by the American economy, which exceeds sustainability parameters. Besides, an expectation of a bailout has now become ingrained in the system. Therefore, the amount that has been borrowed clearly exceeds that which can be paid back ultimately.

According to Booth and Johnson, this warped reality is evident in three areas:

1.    First, our politicians remain obsessed with power. Therefore, what they are interested in are “brighter prospects” and re-elections. For them, the government is an opportunity to buy favors and win elections over and over again, since multiple bailouts figure as normal expectations, rather than as exceptions.

2.    Financers seem to only see easy money and promising fortunes. The scale and complexities of modern finance is being used to shield reality. And the financial sector isn’t keen on unraveling truths either, lest their business be affected. Therefore, larger banks are benefitting from hidden government subsidies. Yet, top bosses never cease to pretend that the smart regulators are totally in control of the situation.

3.    And the public perceives too little until too late. These issues are abstract ones and lack the drama element required to make the headlines that would nudge the public into sitting up and taking note. Besides, our policy leaders are in conflict too. Practically, however, the bailouts are coming against lost jobs and ruined lives! The public remains baffled and confused with it all.

The fact remains that the build up to the 2008 financial meltdown is repeating itself even as we continue to deny it. We are guilty of having mobilized complex and enormous financial entities that can wreak havoc and are immensely difficult to manage. And, our political system, that largely encourages irresponsible growth, can be hardly considered bankable defense sources.

The crises that we are likely to face are likely to be deeper that whatever else we might have witnessed in the past. And, sadly, political as well as financial systems are contributing to it. And, since it is already too late, the collapse of the economy is now inevitable in the global financial markets.