We Will Survive
Some call it greed; others an effort to do right turns bad. Understanding the scope and ramifications of poor lending practices which have resulted in extensive loan failures is beyond our comprehension and understanding. While the federal government is to a very large degree responsible, the current administration has laid off the blame on Wall Street. We all know of it but it is amorphous enough so that it can be made capable yet no one in particular becomes responsible. This issue has so much spin, it makes one absolutely nauseous.
While many are financial impacted, we are suffocating on political obfuscation. Absent leadership in the executive branch, and with Congress divided purely by political affiliation, we are a ship without a rudder. All issues are decided by party affiliation. A republican could say “good morning” and a democrat would respond “why”.
Today we are told that bad loans present the risk of a financial meltdown of our banking system. The issue, a humongous bail out, has now been referred to as a “rescue plan”. This is nothing more than an illusion created by the administration.
A loan is a risk. A jeopardy in which all participating parties share the responsibility. The borrower in this case was pursuing the American dream of home ownership. With skyrocketing price levels, and no mitigation of the spiral in sight, it was very attractive for lenders to fuel the system with easy money. The concept of making stated income loans; purchases with no money down or deferred interest payments, went beyond a level of prudent lending, placing both the lender and the borrower at risk. The players lost total sight of the speculation in which they were engaging. Any sense of risk was total overshadowed by visions of phenomenal short term gain. The true magnitude of the deficit remains unknown, a very frightening reality.
The ultimate loser is the individual and worse yet the family who was caught up in this wave of unaccountability. Many have lost or will lose their homes. Expenses incurred in buying the home are non-recoverable. With any new home, there are additional new costs associated with making the house a home. This like added to the already stretched budgets. Collectively, it creates a fiscal calamity.
For the institutions, investors and general market, there will be a financial impact. It will be far easier for them to recover than the individual or family who has been damaged in the process.
Despite the tragedy of this economic catastrophe, we will survive. The issues are very complex. Short term solutions such as government bail out are as dangerous as the crisis itself. As Americans, we will come together as a people, support those in need, climb the ladder to recovery and learn from our mistakes.
