“INSIDE JOB”

Today's problems come from yesterday's “solutions”.
The first law of the 5th discipline can surely indicate the method for the acquired riches of the trading companies. Companies like Goldman Sachs and Lehman Brothers, had used undrhanded methods in their operations that assured them of easy wealth by fooling customers into taking unnecessary risks knowing fully well that once it blows over they not only goes unscathed but also profit from it by the default credit swaps from AIG. While this method was ingenious in a business point of view. It is clearly unethical. Although it did its job at that time of solving their problems on how to earn a big profit. It became a huge problem now that it caused the global recession.

The harder you push the harder the system pushes you.
When stock markets plummeted. It was pretty obvious to the rest of the world that the US is in a financial crisis. Lehman Brothers Trading Company was on the brink of bunkrupty and it was to everyone's best interest that they will be able to stabilize to prevent the inevitable crisis. However, no matter how much time, money and effort both the private and public sectors had invested in the matter. Lehman Brothers declared bunkrupty. And because of that, the rest of the company heavily affiliated with the Lehman Brothers took a pretty big blow in their financials as well.

Behavior grows better before it grows worse.
Everyone was able to share in the benefits while it was good but the story was clear when it showed that while the benefits are good and welcome it was definitely temporary. This is an example of behavior going better before it goes bad when all of a sudden, as if it had happened over night. People lost their jobs and their family assets are gone. The US economy had plummetted and companies went bunkrupt.

The cure can be worse than the desease.
The strategy the business moguls used was one way to boost the company's profits but it created a whole new set of problems that the country was totally unprepared for. The SEC even lifted the limit for the leverages of the bank, another way to make more profit. It worked as well for a period of time until it was clear that the banks have more than triple their loans while their bank funds stayed the same.

The easy way out usually leads back in.
When the upper echelon of the big time companies saw that it was easy to make a profit out of CDOs, they started to sell it to their customers indiscriminately. This is the easy way out to their problems on how to increase their profits. However, no matter how well this business strategy was thought out. It did not do well for America's economy in the long run. The way transactions was made one after another. It did last for more than a couple of years. The process in which America's economy's deteriorated was a slow one but when it finally became apparent. The profits no longer come in.

Faster is slower.
The companies that accepted this method as a shortcut to instant wealth had proved to the world that it had led to their undoing. Lehman Brother's declared bunkruptcy. Banks had been acquired by the bank of America. The attempt to do things faster had resulted to slowing this down inadvertedly.

Cause and effect are not closely related in time and space.
There were no inherent cause and effects that had happened because of someone else. In fact most of what happened was because of the corporate leaders own doing and that includes the collapse of their companies.

Small changes can produce big results – but the areas of highest leverage is the east obvious.
The leverage can either be considered a positive and negative thing depending on how it is geared towards. Although the actions were small, little transactions that the companies thought wouldn't matter. The fact that they know that they are dealing with risky transactions, they still assured customers it is completely safe relying on their AAA ratings. However small these transactions may be, it had affected the economy on a global scale.

You can have your cake and eat it too – but not at once.
It is a way to have your cake and eat it too. A way for the companies to sell to customers and have it absolutely risk free – for them. There will be risk and with the way they are doing things it carried an even bigger risk than usual. However, there are companies like Goldman Sach that had believed so as well, and as a result betted against their own customers and company by ordering an enormous amount of credit default swaps from AIG. Thus not only did Goldman sachs did not lose any money, they gain even more so than the CDOs they are selling, having the cake and eating it too.

Dividing an elephant does not produce two small elephants.
Goldman Sachs had predicted the risks their CDOs presented and as a way to reduce the impact it will cause to their company they ordered credit default swaps. This is a way to divide the hypothetical elephant in two. However, as the end results proved. It did not divide anything in two as it did not solve anything.

There is no blame.
It is easy to pin the blame on somebody else. Whether it is to the companies that is accused of defrauding their customers or for Standard and Poor's, Fitch and Moody's faulty ratings, at this point in the United States' economy, it matters little. What had happened to the economy will undoubtedly affect the countries as a whole and that it won't only affect a single person or system.