The modern world has been engulfed by many a

financial crises in the recent past. The most

devastating financial crisis of the century occurred
in 1929, which led to the Great Depression and
since then, humans have been witness to many a
crisis, and have managed to survive them all.
Economists and other financial experts have
outlined many a reason for these financial
debacles. The irony is that despite many of the
causes being similar, history tends to repeat itself
and we are confronted with similar problems
again and again. For example, after the Great
Stock Market crash of 1929, one would have
thought that people would learn their lessons and
never repeat the same mistakes. Yet, a cursory
glance of the history of the last 80 years shows that
we have had many similar stock market crashes,
and many of them occurring in the last few
decades itself. So why is it that people fail to learn
their lessons? Or is it that we choose to create such
problems for ourselves? Many thinker and
financial gurus have tried to answer the above
questions, using their knowledge and expertise of
the financial domain, but are unable to explain
why such events should occur repeatedly and how
to prevent their future occurrence. In my opinion,
the answer cannot be arrived at simply through
superficial financial analysis --- The problem is an
intrinsic one, and would have to be investigated
deep within the recesses of the human personality.
The recent years have seen one crisis after another.
The crash of the housing bubble in the US and the
subsequent financial tsunami that spread across
the globe, wreaking havoc in the financial markets,
has made people rather jittery about the
competence of the financial tsars of the modern
world. Just when people started thinking that the
worst was over, a small European country with a
rich ancient heritage sent the alarm bells ringing to
wake people up from their self imposed slumber
of denial. The country in question, Greece, had
never been heard of before in the context of the
world economy, but in 2009-10, it became one of
the most watched economies throughout the
world. The issue assumed even more significance
considering that the world had just been through
one of the worst financial crises of the century and
it sparked fears about the recovery pattern
following the dangerous “W” curve ---- the
economy coming out of recession for a while only
to sink deeper into recession. Before discussing
further, it would be prudent to analyse the context
which nurtured the eastern European crisis and
allowed it to escalate into such massive
proportions.
Since the last decade, the Greek economy has seen
rapid growth, aided by huge foreign capital
inflows into the country. The Govt. borrowed large
amounts of capital to fund the public expenditure
which was used as a means to keep the economy
rolling and give an impression of prosperity. In
fact, it is alleged that the Greek Govt paid huge
sums of money to companies like Goldman Sachs
to hide the details of their actual level of
borrowing from the overseers of the European
Union. For some time, there was indeed prosperity
in the country --- people were living better off,
wages were increasing, exports were on the rise,
pension benefits for retired personnel were
increased from an early age and tourists were
flocking to the country and filling the national
coffers. Greece was having a dream run; the best
time ever since the restoration of its democracy.
But as with any dream, one has to wake up one
day and face reality. The global financial crisis
brought a harsh end to this phase of tremendous
economic growth. The two major industries of
Greece, tourism and shipping were hit hard by the
downturn. Investors began withdrawing their
money from the markets and funds became scarce.
The paralysis of the banking system and lack of
credit stalled all developmental activities in the
country and the economy began to stagnate. The
increased wages of labourers which were brought
about by the Govt. to showcase its concern for the
welfare of the people returned to haunt the same
Govt. as a Frankenstein. The increased wages had
pushed up manufacturing costs which meant that
the country’s exports were no longer competitive
in the global markets. With exports down, and a
global credit crunch stopping all activities, the
economy began to slowdown. However, the
unsustainable level of Govt. debt was inevitably
going to raise its ugly head ---- And as anticipated,
it did. The country woke up to a rude shock when
credit rating agencies such as Standard and
Poor’s, Moody’s and Fitch reduced the Govt.
bonds to junk status --- which meant that the
Greek Government would be unable to repay its
debts in full. Hedge funds and speculators took
advantage of the situation and made the situation
worse, like a bunch of hyenas jumping in to snap
up the remains of a carcass devoured by a lion.
The crisis had by then reached huge proportions
and threatened to bring down other countries as
well with investors losing confidence in the
European economies and withdrawing their
money in large numbers. Had it not been for the
bailioout, the economy would have collapsed by
now. The complete picture of the situation is still
not clear, as much of the recovery is still underway
and thinking person would always be prepared to
receive any rude shocks.
What becomes amply clear from the above
analysis of the Euro debt crisis is the fact that the
human race is inherently impulsive. Investors,
politicians, financial analysts and the common
public lack financial prudence, emotional stability
as well as integrity. Humans are selfish by nature,
unwilling to work hard and lacking concern for
others. Excessive consumption, living beyond
one’s means and the desire to acquire more in less
time have almost always been the root cause
behind a financial crisis. Left to its own, the
human population would turn the world into
chaos and a state of anarchy would prevail. The
evolution of the human being from a bunch of
nomadic hunter-gatherers to the present day
civilized being seems to have been incomplete,
leaving behind remnants of the original mind-set
of our forefathers in our minds. Perhaps that can
help explain why we are interested in hoarding
wealth when we know we cannot take it with us
to the grave or why we consume excessively given
the chance even when there is no apparent reason
to do so. In the above case, the crisis was brought
about by a combination of human greed, a quest
for power and subsequent wooing of voters and
simple indifference. So who are the culprits of the
crisis? Firstly, the banking and monetary system,
for not regulating the flow of money and giving
into the illusion of prosperity and the desire to get
high returns in short times; Secondly, the
Government which tries to woo its voters with
sops despite the clear knowledge of the
unsustainability of such actions and its ill-effects
on the country’s economy; Thirdly, the credit
rating agencies which failed to call a spade a
spade and added to the illusion of prosperity in
the Euro zone region, especially in Greece; Fifthly,
the investors and speculators who show a total
lack of concern for others and try to make profits
from others’ distress; and finally, the general
population who cannot curb their consumerist
tendencies even in the face of a crisis situation
with total disregard for the other fellow-human
beings residing in the world. These human traits
are unlikely to go away easily, and as such, we are
bound to see newer crises occurring at different
times. This is like a self fulfilling prophecy ----
“History repeats itself”. The irony is, despite
knowing our weaknesses, we are unable to change
ourselves for the better. It is as the disciples say to
Jesus in the Bible ---- “The Spirit is willing but the
flesh is weak”.

Human Behavioural Patterns as

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