Well it finally happened. President George W. Bush stepped forward and said "our economy is in danger" and faces a "great challenge". Where did all of this begin and where do we go from here?
To begin, we might want to go back to the beginning of the war with Iraq. The cost of the war is now about $10,000,000,000.00 per month, a staggering figure. The Federal debt now reaches forward at least three generations and possibly as many as four or five.
And, as I wrote in a previous article, each additional dollar which the Fed prints devalues each current dollar in circulation. What we have is a double whammy. Not only are we paying for the war, we are losing purchasing power because of the additional dollars in circulation - all ten billion - each month.
Add to this the high risks being taken by investors and investment bankers on Wall Street, particularly in the mortgage sector. Those risks came with huge consequences. As investors continued to lower the standards for home buyers, the ratio of defaults on mortgages rose. Banks and investors who held or were purchasing those mortgages were losing ground fast. But that was well over a year ago.
Interestingly enough, those most responsible for the largest losses, the C.E.O.'s, were let go or allowed to walk away, but certainly not empty handed. No, to the contrary, they received huge multimillion dollar "golden parachutes". But the bleeding did not stop there.
There are so many events which are coming together now, more powerful than we have faced, as a nation, in the past. Property values plummeted, and when it came time for most people to refinance existing mortgages from three or four years ago, most didn't have money or equity in their homes to pay for their closing costs. And a lot couldn't qualify - new higher requirements - even if they could afford the costs.
People can no longer refinance their mortgage as readily as a few years back, and in essence use their equity like cash in an ATM, which removes tremendous sums of dollars from all sectors of the economy. This slow down of spending or the reduction of the velocity of spending has a ripple effect throughout the entire economy.
Most recently, the Federal Government stepped in to bailout the nation's two largest mortgage purchasers, Fannie Mae and Freddie Mac. We've also seen well established Wall Street firms and some major banks fall. The Fed also bailed out AIG, a infinitely important insurance company for $85,000,000,000.00, and now we are facing a $700,000,000,000.00 bailout.
I have two questions. The first is somewhat rhetorical, and that is; haven't you seen this coming for a long time? The second is simple, given all of these conditions, what are you doing to secure your and your family's financial future. - 15224
To begin, we might want to go back to the beginning of the war with Iraq. The cost of the war is now about $10,000,000,000.00 per month, a staggering figure. The Federal debt now reaches forward at least three generations and possibly as many as four or five.
And, as I wrote in a previous article, each additional dollar which the Fed prints devalues each current dollar in circulation. What we have is a double whammy. Not only are we paying for the war, we are losing purchasing power because of the additional dollars in circulation - all ten billion - each month.
Add to this the high risks being taken by investors and investment bankers on Wall Street, particularly in the mortgage sector. Those risks came with huge consequences. As investors continued to lower the standards for home buyers, the ratio of defaults on mortgages rose. Banks and investors who held or were purchasing those mortgages were losing ground fast. But that was well over a year ago.
Interestingly enough, those most responsible for the largest losses, the C.E.O.'s, were let go or allowed to walk away, but certainly not empty handed. No, to the contrary, they received huge multimillion dollar "golden parachutes". But the bleeding did not stop there.
There are so many events which are coming together now, more powerful than we have faced, as a nation, in the past. Property values plummeted, and when it came time for most people to refinance existing mortgages from three or four years ago, most didn't have money or equity in their homes to pay for their closing costs. And a lot couldn't qualify - new higher requirements - even if they could afford the costs.
People can no longer refinance their mortgage as readily as a few years back, and in essence use their equity like cash in an ATM, which removes tremendous sums of dollars from all sectors of the economy. This slow down of spending or the reduction of the velocity of spending has a ripple effect throughout the entire economy.
Most recently, the Federal Government stepped in to bailout the nation's two largest mortgage purchasers, Fannie Mae and Freddie Mac. We've also seen well established Wall Street firms and some major banks fall. The Fed also bailed out AIG, a infinitely important insurance company for $85,000,000,000.00, and now we are facing a $700,000,000,000.00 bailout.
I have two questions. The first is somewhat rhetorical, and that is; haven't you seen this coming for a long time? The second is simple, given all of these conditions, what are you doing to secure your and your family's financial future. - 15224
About the Author:
George L. Kenney has a BA in Economics and career of twenty five years in financial markets. He is now a successful online marketing pro, with a passion for helping others live their dreams. He will help you learn how to leverage your time, money, and technology to put you on the fast track to success. To learn more about his team and the Marketing Mentors Program Click Here
