CBGE

About the financial crisis & how we cope with it

Are there companies that profited from the crisis?

The financial crisis that we are currently facing has hurt most businesses financially; however there are a few that have done well. There are the obvious ones that always do well during tough economic times like the repo men but there are also a lot of businesses that you would not think would do well that in fact have. Most troubling for a lot of people is that some of the companies that have profited are the same ones that played a role in causing the crisis.

The people who profited the most from the financial crisis where the companies that trade derivatives as a major part of their business. A lot of these companies made very large profits in the run up to the crisis and then continued to profit when the crisis hit by taking a short position. This meant that they were actually making money from the struggling economy. Once the economy had collapsed these traders were able to continue to make money since they were able to buy securities at a much lower price which they have been able to profit from as the economy has started to recover.

The other group of companies that have made money out of the financial crisis are the banks and other lenders that gave out the bad loans that were largely responsible for the crisis. Since they were able to bundle the bad mortgages with the good ones and sell them on to unsuspecting investors they were not the ones who suffered when people started defaulting on their mortgages. Admittedly their business has struggled lately because of smaller number of loans that are being given out but there are very few banks that have not remained profitable.

A lot of property management companies have also profited from the financial crisis. This is largely because the declining value of properties has made it easy for them to buy them at very low prices. At the same time with people losing their homes there are increasing number of people who need to rent. The result is that rents have been going up while property prices are going down. This is good news for the companies who make a business of renting properties. They have more tenants and they are able to charge higher rents.

Companies that produce commodities have also benefited because of the financial crisis. This is in part because people are putting their money into commodities because they view them as being safer than cash, stocks or bonds. This has driven the price of most commodities up quite dramatically. By far the biggest beneficiary of this the gold mining companies but the producers of virtually all commodities have benefited. Part of this is the increased demand due to the growth of countries like China but the use of commodities as a safe haven for money has also been a major factor.