Holy Cow! We were close…

Mark my words…  There will be many lengthy articles and even entire books written about what almost happened to our financial system this past Thursday.  In short, banks were about to run out of money to loan to each other and to other businesses to operate.  That would have frozen the ability for numerous businesses, some large corporations, to operate.  We came very close to a complete freeze-up of our financial system that would have had catastrophic consequences.  One person I heard talking about it said that businesses simply would have, “started falling from the sky to their deaths.”   The more I study and read about what almost happened, the more I realize this is very scary stuff.

Whether you believe the government’s bail-out of Fannie/Freddie, Wall Street investment banks, AIG and its assumption of billions and billions (perhaps trillions) in bad debt is a good idea or not is not the point of this post.  The point is that imbalance has taken over the way we operate in this country and it threatens to do real and serious harm.

I wrote about this not to along ago here.  Follow this simple timeline:

1.  Washington overly loosens rules on how financial institutions can write mortgages (imbalance of regulation).

2.  Financial institutions begin offering credit to people who can’t afford it (imbalance of sound business policy).

3.  Individuals bite on the gimmicky loan offers, spending more than they can afford (imbalance of sound decision-making).

4.  Housing markets starts to slow and the rate of mortgage sales drops decreasing income for lenders (imbalance of income).

5.  People begin defaulting on outstanding loans (imbalance of personal checkbooks – totally predictable).

6.  Bad loans take up more and more space on the balance sheets of lenders (imbalance of liability/assests – again, totally predictable).

7.  The government, already WAY out of balance with Nat’l debt, takes on even more to save our financial system (more and more imbalance).

Of course, this is a highly simplified version of what happened, but you get the point.  The government is imbalanced.  Investment banks are imbalanced.  Many individuals are financially imbalanced.  All of this imbalance is leading to real problems that affect you and me.  Balance is not a hard concept to grasp.  Greed makes it hard to maintain.  We wanted houses we couldn’t afford.  Lenders wanted profits from people who couldn’t afford to be their customers.  The government wanted to not face the real problem ahead of time.   Where will it end?  I’m not sure.  What I do know is that we almost witnessed a collapse of the biggest financial system the world has ever known.  Geeze.  Can we just not start living with common sense again?  Can’t we get back to the balanced fundamentals of sound business practices and good judgement?  I sure hope so.  If not, the worst isn’t over…

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6 Responses

  1. I appreciate your simplified version.

    I know that my family is working toward balance, after a period of imbalance. When you step back and look at our nation as a whole, we are a greedy people. It’s sad. The state of our economy and the future of it are just frightening. I sense that many people don’t even realize this.

  2. Charlie,
    I could not agree more! I sure hope that
    before a complete bail-out that our government
    will fix the imbalanced decisions. We
    just get deeper & deeper in debt. We cannot
    run a household budget this way.

    Great Posting!

  3. You have my vote! Charlie FOR President. So much truth here…

  4. I agree with Eve!

  5. I cannot vote for a president who can only blog once every 2 weeks. I need daily doses of weather and wisdom.

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