- This morning, I enjoyed a breakfast I prepared at my house of scrambled eggs, sausage, and a slice of low carb toast with my mom at the church office. The food was delicious, if I do say so myself. My mom made the coffee and it was great.
- The topic on everyone’s mind is the economy. Who would have thought that this country could be so vulnerable? It seems like the things we put our trust in can so easily fail, but only God does not fail.
- Combined with a lack of available money in the banks, fear is one of the driving forces in this potential meltdown. It’s the fear that if I don’t get my money out now, I will not be able to get my money at all. So people will cash out of banks, money markets, mutual funds, etc, and the available liquid assets banks and lenders use to extend credit dries up. Without the available credit to do normal business, and banks not having money to lend, it further drives people to pull their cash out. When a bank cannot give you cash that is in your account, they go under. When their is no available credit or liquid assets, corporations and businesses cannot pay employees, consumers cannot purchase goods, and the economy completely grinds to a halt.
- It’s not uncommon for a bank to fail. It has happened before. It is not uncommon for homeowners to foreclose. That happens at a fairly predictable pace. What is not common in the US is double digit unemployment, foreclosures in the numbers we are seeing and will continue to see over the next couple years, and major investment firms folding over night due to a lack of liquid assets. We are teetering on a true economic meltdown.
- The $700 billion bailout (which would more likely be $1 to $1.5 trillion) would not really solve the problem. The government claims that taxpayers would not get stuck with 100% of that bill. They claim that there would be revenue from those toxic loans and mortgages as a percentage would continue to pay their mortgages, and the other homes that the government would foreclose on would be sold or rented for revenue. I have a hard time believing that the government can efficiently sell or rent property at a rate that would bring in revenue, and even if they could I don’t believe that they would pay down any debt with that revenue. They would find a way to spend it on something new.
- I also believe in the free market. I believe that there has to be pain in order for their to be healing. Unfortunately, this problem seems to have stemmed from the Community Reinvestment Act, which mandated that banks and lenders approve mortgages for people and businesses who were under qualified as a way of extending “the American Dream” to everyone.
- Just for the record, I don’t believe the American Dream is owning a house or anything like that. The American Dream is the idea that no matter where I start in life, I have the right to pursue happiness, to attempt to better myself, to risk, and that I am not forced into a “class” the rest of my life. But just because I put my hand out, say gimme, and declare that “yes I can” does not mean “yes I will” or “no I won’t”. Nobody owes you or me anything by birth. But greed has pushed us to the edge.
- McCain has suspended his presidential campaign while he goes to DC to work on a fix to this mess. I appreciate that even though it may end his chance to be president. Obama continues to want to have the debate, McCain wants to work. There is time for the debates later, but this crisis is happening now. Talking about it will not get it done. I am not interested in a talker or debater for president as much as I want someone who will get the hard work done that is needed.
- If this is a political stunt, it will be exposed as such. If this is not a political stunt, then shame on those who are saying that it is. Obama could look to his senior colleague in the senate for guidance here. Let’s do this thing right.