Further Financial Crisis 'Inevitable'

Former Federal Reserve chief Alan Greenspan said human nature made another global financial crisis inevitable.

"They (financial crises) are all different, but they have one fundamental source, that is, the unquenchable capability of human beings when confronted with long periods of prosperity to presume that it will continue."

The believe that markets would continue to rise led people to take speculative excesses with the consequences that have dotted history.

"No two crises have anything in common except human nature."

The current crisis was triggered by the trade in US sub-prime mortgages, any factor could have been the catalyst. If it were not the problem of these toxic debts caused by people's failure to repay the loans that were granted to homebuyers with bad credit histories, something sooner or later would have emerged.

It's human nature, unless somebody can find a way to change human nature, we will have more crises and none of them will look like this because no two crises have anything in common, except human nature.

To avoid a repeat of the situation, financiers and governments should look to clamp down on fraud and force banks to hold more capital to cushion themselves against financial shocks.

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Humans are forgetful. When we go through a crisis, many people suffered and some will remind themselves not to make the same mistakes again. Others who have not suffered tremendiously, but just by the economy, would not realise the actual difficulties during the crisis.

When the crisis is over, economy will face boom and prosperity. People will start to forget what happened after a short while, and starts to spend and over-commit themselves. Before they realise it, the next crisis arrived sooner than thought, leaving these lot of people suffering.

In 2007 and early 2008, Asia was facing a boom. Many people were too ready, too soon, to change luxury items. Some luxury items cost an arm and a leg, but people forgotten the crisis S-E Asia underwent, namely Asian Financial Crisis (1998), 911 (2001) and SARS (2003). The economy stablized in 2004 and only starts showing promising signs of recovery in 2005.

As Singapore's economy crawls out of the 8 years on-and-off recession, people starts spending. US Sub-prime started showing it's fiery in August 2007 but many believes the storm won't reach our shores.

Now that the economy is showing signs of recovery, there will be some who will start spending.

Will people ever learn to take precaution? Unlikely! There will be the same patterns soon.