Before I start I have to say that I'm an economic dummie. This is just simply my (average American) perspective on the financial mess we find ourselves in. Don't look for answers here, I'll simply be raising more questions and exploring alternative views in this post
I remember a few years ago warning my friends and family that in my opinion, real estate prices were artificially too high. There was a bubble growing larger and faster than the population could support. I thought, "Well, I'm not very smart about this kind of thing and I'm probably wrong." I didn't really understand the reasons why I felt so strongly that the housing bubble was going to burst, or the extreme effects it would have on our economy, I just really felt in my gut that something was wrong and the piper was coming for his pay.
Lo and behold, eventually this did come to pass, though almost a year later than I predicted. I had, however, no idea what was to follow. I know now that I merely sensed a symptom of a larger problem, not the White Elephant that's been standing in the room for years.
My thought on realty was that home prices were doomed to go through a painfull re-adjustment. I had a sense that other parts of the market were similarly going to face the same fate, but had no idea how massive this thing was. I'm convinced that like me, we all knew something was terribly wrong but couldn't quite put our finger on it.
Flash back: The Dow Jones reaches 10,000 points. Economists claimed this is just a fluke and that the market wont support this for long. The Dow will drop soon. Well, they were right and wrong. Even today the Dow is above 10,000 points and the market did everything it could over the last 8 years to make that happen.
Here are my questions: Was the Dow another example of part of our market that was artificially inflated? If so, how deep does this go? Is it likely that our own leadership and market proffiteers engineered it?(I believe yes.) Do we really think throwing money at this is going to do us any good in the long run?
I feel like our government, Republicans and Democrats alike, are lying to us. They keep telling us the sky is falling! Yes, something very big and painful is undoubtedly happening right now. But I have serious concerns about what our leaders really want to accomplish. My thought is that they simply want to put a band-aid on the economic hemmorage so they can make a little more money before the shit hits the fan. They keep crowing about new regulations. Well, why haven't the regulations already in place been enforced? Why is it that the few regulations that were enforced cause, in part, this turmoil?(Sub-prime lending)
Our leaders tell us that banks won't give out new loans, the economy will freeze, and that we'll experience The Great Depression part II on steroids. 92% of banks are still approving loans, though they are a little more picky about who they'll aprove. Car dealerships are still finding institutions to give people with less than savory credit car loans. Is our reaction to what these assholes in D.C. telling us making the situation worse than what it is? Yes! But then again, I'm an economic dummie.
I don't know that I can trust the government to make smart "investment" decisions with our $700B when they've bankrupted everything else they've touched. I once wrote on one of my blogs that I was upset that Congress suddenly adjurned for a summer vacation when I felt we really needed them there to do their jobs. Come to find out, they weren't doing their jobs when they weren't there. I'm glad that the bill didn't pass. I think something this big deserves more time and planning. Hell, we planned the Iraq war for six months before we went in, and it ended up being a severely flawed strategy.
I wish I had the money to invest in the stock market. There are some really good deals out there right now, because the people that most people hire to manage their money are freaking out and losing your money by throwing the baby out with the bath water. I predict that stocks will be driven to an artificial low. Soon, those who had the foresight to invest during this low, will be filfthy stinkning rich. We wont learn our lesson, and home and stock prices will be driven artificially high again within 2-3 years.