Being in Washington DC in the midst of the financial crisis provided me with a unique opportunity to experience it as it occurred.  This report contains my analysis and comments on the financial crisis as I saw it.

The crisis will have a major effect on future infrastructure developments, and I spent some time discussing this with some of the local experts during my visit.

While everybody has an opinion about the financial crisis, it is clear that nobody really has a full understanding of all the reasons for it - not even the endless army of financial experts which is rolled out on the Hill.

Similar to the dotcom bust, the financial analysts obviously didn’t anticipate the current dilemma and, even with their combined financial knowledge, they were unable to do anything to prevent it happening.

From the very start, the practice of selling mortgages to people who could not afford to repay their debt, and then securing investment packages world-wide to back that debt, was a recipe for disaster.

The same can be said for credit companies which handed out AAA credit ratings left, right and centre. This created an enormous imbalance between the commercial credit companies, stock exchanges and other so-called controlling institutions. In the process, they all earned an enormous amount of money by supporting a system which is in dire need of fundamental change.

In addition, financial research companies are dependent upon the advice they give to their financial advisors who, in turn, are dependent upon the commissions they earn from the clients they provide financial advice to.

Independent commentators and journalists have questioned some of the financial schemes which were developed, but the financial analysts continued to create more complex schemes while they paid themselves tens of millions of dollars worth of bonuses each year.  While many people in the rest of the world looked on in disbelief, nothing was done about it.

Resolution of the crisis requires quick, astute and decisive action.  Unfortunately the people who were responsible for the crisis - and who, only a few short weeks ago, were still proclaiming that the economic system was stable - are also the same highly compromised people who are now attempting to rescue the US from the morass they have created.  I must say this is not a very comfortable feeling.

Related Research: 2008 USA - Telecoms, Wireless and Broadband