Abstract:
If too optimistic and overinvested market breaks down, it can hit with
a disastrous force.
In individualistic capitalist system it is not easy to exert a conscious
influence on restoring in economic life. It is a characteristic of depression
which was rightly emphasized by bankers-entrepreneurs but which was not
appreciated by bankers-economist. At the time of economic growth many new
investments bring a satisfactory current income. A breakdown occurs when
there appear doubts if the anticipated income is attainable. Once the doubts
occur, they spread very fast.
If illusion are shattered, there appears an “excessive pessimism” in place
of anticipations. There comes to situations when no one can afford having
a flat in the already existing houses.
The paper presents not only the process of financial crisis but also analyzes
its causes an effects.