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?
The starting point could have been the beginning and escalation of the war in Iraq. The cost of the war has risen to $10,000,000,000.00 per month, which in and of itself is staggering. The Federal debt is now passed forward through at least three or four generations.
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.
Then we have the extreme risks which were being taken by investors and investment bankers on Wall Street, especially in the mortgage industry. As the investors continued to take more and more risk by dropping the standards for home purchases, the default rates started to climb. Investors and Investment houses who had those mortgages in their portfolios were losing, and losing big. This was a year or so 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.
Without being able to take equity from their homes on a regular basis and convert it into cash - like a real estate ATM of sorts, spending for other items has been reduced. This has the effect of slowing the velocity of the dollars which are already in circulation. This has a ripple effect throughout the entire economy.
In early September, the Federal Government stepped in to bailout Fannie Mae and Freddie Mac, which are the two largest mortgage purchasers. Since then banks and Wall Street firms, some long established, have gone out of business or filed for bankruptcy. And more recently, the Fed decided to step in and bailout AIG, a huge and extremely important insurance company, to the tune of $85,000,000,000.00. We now face a $700,000,000,000.00 bailout.
Two things to consider. Have you seen this coming for a long time? And, What are you doing to prepare for and secure your and your family's financial future? - 15275
The starting point could have been the beginning and escalation of the war in Iraq. The cost of the war has risen to $10,000,000,000.00 per month, which in and of itself is staggering. The Federal debt is now passed forward through at least three or four generations.
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.
Then we have the extreme risks which were being taken by investors and investment bankers on Wall Street, especially in the mortgage industry. As the investors continued to take more and more risk by dropping the standards for home purchases, the default rates started to climb. Investors and Investment houses who had those mortgages in their portfolios were losing, and losing big. This was a year or so 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.
Without being able to take equity from their homes on a regular basis and convert it into cash - like a real estate ATM of sorts, spending for other items has been reduced. This has the effect of slowing the velocity of the dollars which are already in circulation. This has a ripple effect throughout the entire economy.
In early September, the Federal Government stepped in to bailout Fannie Mae and Freddie Mac, which are the two largest mortgage purchasers. Since then banks and Wall Street firms, some long established, have gone out of business or filed for bankruptcy. And more recently, the Fed decided to step in and bailout AIG, a huge and extremely important insurance company, to the tune of $85,000,000,000.00. We now face a $700,000,000,000.00 bailout.
Two things to consider. Have you seen this coming for a long time? And, What are you doing to prepare for and secure your and your family's financial future? - 15275
About the Author:
George L. Kenney has a BA in Economics and career of twenty five years in financial services. He is now a successful online marketing pro, with a passion for assisting 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
