Worse than I thought.
It appears that the problems for our economy are much worse than I first thought. Below is an article out today about growing concerns.
By TIM PARADIS, AP Business Writer 4 minutes ago
NEW YORK - Wall Street retreated Monday after Fannie Mae and Freddie Mac fell to their lowest levels in nearly 20 years on concerns that the government might need to bail out the mortgage financiers. Weakness in the overall financial sector sent the Dow Jones industrial average down more than 175 points. Investors were again uneasy about the health of financial companies after media reports of further problems in the sector. Barron's said the U.S. Treasury might have to bail out government-chartered Fannie and Freddie, which, the weekly noted, would likely wipe out shareholders' equity in the companies......
I am going to present an idea to start to repair this problem, it will sound a little different than what out current leaders are telling everyone to do. But consider two things...1 our current leaders are a large (Not all of the) reason this is even happening. 2 these are the same leaders that after 9/11 attempted to calm our fears by telling us to simply "go shopping".
First, basically everyone needs to stop buying anything that is not absolutely necessary to sustain life. Understand that we must start viewing the economy as a "full circle" concept. The easiest way to understand this is to think of it like a bag of money. Each person, company, and government usually has roughly the same amount of money to put into their money bag every month/year. Out of that bag we must pay for EVERYTHING we want and NEED. So if you are taking out more than you put into the bag you will ALWAYS FAIL no matter how long you manage to "keep your head above water". So to make up the shortage most people do one of two things they either use credit or they choose what not to pay. This means over time we have been pushing or carrying the debt load longer and longer. People need to realize that no matter what you have been told SOMEONE WILL eventually HAVE to pay off all those debts and the interest from said debts. For whatever reason our banks and financial institutions have failed to make that point CRYSTAL CLEAR to all those carrying huge debt loads. Everyone either through greed, or stupidity feeds the monster by allowing/creating scheme after scheme to allow as many people as they can to live beyond their means. Now all those debt loads are coming due.
You might ask why now...what is different than before? It only takes one link in the chain to break, that is to say only one creditor to call a debt DUE to cause the whole house of cards to fall. In this case it starts with perhaps a large construction firm demanding payment for 5,000 new homes they built for whatever large bank as soon as they are built and not waiting for them to be sold as has been the practice up to that point. Thus starts the chain reaction of calling those debts in, only now so much debt has been spread out in so many areas that now the only thing left in the moneybag is IOUs.
A very simple way to figure this out is to ask what actual GOOD (convenience is not an answer) does credit do for any person/economy? Answer, none because the credit rating was invented to force us to seek credit. Long ago when a home/property was sought to be purchased banks based a loan on a simple default history. Meaning if you always paid the bank before or have never defaulted to the bank and you had a down payment you could buy. It was only after banks and others figured out how to create an entire money making scheme based on credit did it become mandated that we each gain a credit score. After all what kind of logic is it to say no credit history means you should pay higher rates....stupid huh?
Now more on this "full circle" concept. I know this is a very simple concept but the basic principals are true none the less. When you spend, that money is supposed to go up the chain or around the circle to the merchants/service persons who then pocket their share and send money out to their employees and so on. From there the remaining money goes to the makers/owners of whatever we buy, use, or consume. Those owners then take their money and they also pay their employees and so on. In history the owners always allowed enough money to make its way back around to the people at the start of the circle so as to allow them to keep the flow alive. But in the last 10 years or so the owners of wealth have allowed less money to flow around the circle and also raised the price for everything moving around in that circle.
So combine the credit situation with the constriction of money in the system we end up where we are now.
In addition, now the government instead of taking measures to control or prevent this issue have joined in on the credit craze and extended our country greatly into the debt of many less than friendly nations that do not hold our best interests at heart.
ANSWER: Stop buying plasma HD TVs and buy bonds....seriously. Do the research and you will see investing money into our nation is the only answer. After all without that, whatever money you may think you have earned will be worthless as our money is only as good as the government that backs it. It would also help if we made it know to out new and future leaders we will no longer allow them to earn money today on the debts of our children.
By TIM PARADIS, AP Business Writer 4 minutes ago
NEW YORK - Wall Street retreated Monday after Fannie Mae and Freddie Mac fell to their lowest levels in nearly 20 years on concerns that the government might need to bail out the mortgage financiers. Weakness in the overall financial sector sent the Dow Jones industrial average down more than 175 points. Investors were again uneasy about the health of financial companies after media reports of further problems in the sector. Barron's said the U.S. Treasury might have to bail out government-chartered Fannie and Freddie, which, the weekly noted, would likely wipe out shareholders' equity in the companies......
I am going to present an idea to start to repair this problem, it will sound a little different than what out current leaders are telling everyone to do. But consider two things...1 our current leaders are a large (Not all of the) reason this is even happening. 2 these are the same leaders that after 9/11 attempted to calm our fears by telling us to simply "go shopping".
First, basically everyone needs to stop buying anything that is not absolutely necessary to sustain life. Understand that we must start viewing the economy as a "full circle" concept. The easiest way to understand this is to think of it like a bag of money. Each person, company, and government usually has roughly the same amount of money to put into their money bag every month/year. Out of that bag we must pay for EVERYTHING we want and NEED. So if you are taking out more than you put into the bag you will ALWAYS FAIL no matter how long you manage to "keep your head above water". So to make up the shortage most people do one of two things they either use credit or they choose what not to pay. This means over time we have been pushing or carrying the debt load longer and longer. People need to realize that no matter what you have been told SOMEONE WILL eventually HAVE to pay off all those debts and the interest from said debts. For whatever reason our banks and financial institutions have failed to make that point CRYSTAL CLEAR to all those carrying huge debt loads. Everyone either through greed, or stupidity feeds the monster by allowing/creating scheme after scheme to allow as many people as they can to live beyond their means. Now all those debt loads are coming due.
You might ask why now...what is different than before? It only takes one link in the chain to break, that is to say only one creditor to call a debt DUE to cause the whole house of cards to fall. In this case it starts with perhaps a large construction firm demanding payment for 5,000 new homes they built for whatever large bank as soon as they are built and not waiting for them to be sold as has been the practice up to that point. Thus starts the chain reaction of calling those debts in, only now so much debt has been spread out in so many areas that now the only thing left in the moneybag is IOUs.
A very simple way to figure this out is to ask what actual GOOD (convenience is not an answer) does credit do for any person/economy? Answer, none because the credit rating was invented to force us to seek credit. Long ago when a home/property was sought to be purchased banks based a loan on a simple default history. Meaning if you always paid the bank before or have never defaulted to the bank and you had a down payment you could buy. It was only after banks and others figured out how to create an entire money making scheme based on credit did it become mandated that we each gain a credit score. After all what kind of logic is it to say no credit history means you should pay higher rates....stupid huh?
Now more on this "full circle" concept. I know this is a very simple concept but the basic principals are true none the less. When you spend, that money is supposed to go up the chain or around the circle to the merchants/service persons who then pocket their share and send money out to their employees and so on. From there the remaining money goes to the makers/owners of whatever we buy, use, or consume. Those owners then take their money and they also pay their employees and so on. In history the owners always allowed enough money to make its way back around to the people at the start of the circle so as to allow them to keep the flow alive. But in the last 10 years or so the owners of wealth have allowed less money to flow around the circle and also raised the price for everything moving around in that circle.
So combine the credit situation with the constriction of money in the system we end up where we are now.
In addition, now the government instead of taking measures to control or prevent this issue have joined in on the credit craze and extended our country greatly into the debt of many less than friendly nations that do not hold our best interests at heart.
ANSWER: Stop buying plasma HD TVs and buy bonds....seriously. Do the research and you will see investing money into our nation is the only answer. After all without that, whatever money you may think you have earned will be worthless as our money is only as good as the government that backs it. It would also help if we made it know to out new and future leaders we will no longer allow them to earn money today on the debts of our children.
Comments