I’ll See You in the Bread Line

Don’t think you’ve seen the last of this.

The market has dropped 56%… that’s pretty scary, right? However, I don’t believe for a minute that it’s bottomed out. I would not be surprised to see it go as low as 3500… now that’s scary!

Well, to be fair, it’s only scary if you have investments. If you’re like me and you’re relatively investment free, and you have a semi-steady job, then you really don’t have much to lose through all this. Except of course for Obama increasing the taxes on the few people who still have jobs to pay for unemployment for everyone else. That could happen, too.

The more I watch this unfold, the more convinced I am that things are going to get much worse before they get better. That’s because we aren’t treating the disease, we’re only treating the symptoms.

Ooh… foreclosures are screwing up the credit markets, we’d better throw money at the foreclosure problem. That’s like taking Robitussin to treat AIDS (which incidentally isn’t a half bad idea). Foreclosures are a symptom of the real problem.

The real problem was greed. And I don’t mean corporate greed or Wall Street greed. It was personal greed. It was the widespread sense that if someone else has something, I also deserve to have it. Why should that guy have a house while I have to live in an apartment? That’s not “FAIR”. My favorite word… fair.

It wasn’t just houses. There was greed running rampant. People who barely had a job were buying a house, a new car, and a plasma screen, all on credit.

Government encouraged this personal greed by making banks lend to bums and hobos under the guise of “equal opportunity” and “fairness.” Never mind that a market-driven bank will always make decisions in their own best interest, which certainly don’t include issuing credit to risky borrowers. This perfect storm could only happen with a greedy populace and an enabling government.

The market system simply tried its best to make a profit in the regulatory environment they were forced to work within.

Consumer confidence is now crapped out. People are thinking gloom and doom, and Obama with his “we have to do this or we’re screwed” and “it’s much worse than we imagined” comments are making it that much worse. People look to the White House to be a beacon of hope, not a doomsday prophet.

The markets are freaking out under the many threats Obama has made.

It really is the perfect storm.

  7 comments for “I’ll See You in the Bread Line

  1. March 12, 2009 at 1:09 pm

    I recently did a blog entitled Neither Christ nor Anti-Christ in regards to President Obama.

    I am not polictically savy enough to really know or keep up with all the political chaos going on right now … but I will say that I agree with what you said about WE ARE PERSONALLY TO BLAME. This isn’t the governments fault completely … they didn’t MAKE me spend all my paycheck on things I don’t need … nor did they MAKE ME buy a house that really was out of my price range, etc, etc.

    Now more than ever we need to take person responsibility for our actions.

    I do not know where this is going … but we should do what the dollar says … “TRUST IN GOD”

  2. Incredipete
    March 12, 2009 at 2:00 pm

    Well said! Seems like if we really did that and followed some basic principles, we wouldn’t be in this mess.

  3. BJD
    March 12, 2009 at 5:01 pm

    I agree with your culprits

    It was a phony system from the get-go

  4. McMichael Newby
    March 13, 2009 at 4:57 am

    Incredipeter, I agree with your greed comment.

    I also submit the fact serious deregulation of the financial markets (as it started to aggressively happen in the 90’s) combined with greed certainly contributed to this crisis. I don’t consider it the sole catalyst but definitely a big part of it.

  5. McMichael Newby
    March 13, 2009 at 5:05 am

    Incredipeter,

    I thought you might appreciate the newest Cap and Trade article in the WSJ.

    http://online.wsj.com/article/SB123690324492413809.html

  6. Incredipete
    March 13, 2009 at 8:05 am

    The really interesting thing, to counter your deregulation point… is that the economy really started to dive when the SEC got rid of mark to market accounting, and then this week when they said they were thinking about putting mark to market back in, the markets started going back up. I don’t think it’s a coincidence. So it may be that the SEC caused a big chunk of this in the first place…

  7. McMichael Newby
    March 13, 2009 at 11:08 am

    I’m not sure what you mean. M2M was eliminated in the late 30’s and it was recently reintroduced in 2007. Coincidentally, things started falling apart in late 2007.

    Here’s a good recent article from Kudlow at CNBC talking about the recent upturn of events in the economy. He briefly talks about M2M towards the end.

    “There also is a lot of rumbling about a liberalization of the mark-to-market rule, which has wreaked so much havoc on bank profits and capital.”

    http://www.cnbc.com/id/29620751

    Maybe it’s because I went to college for graphic design, not economics, but to me it seems M2M isn’t a good practice then, now or ever. Do you think otherwise? I’d love to know what you think about it.

Comments are closed.