Wednesday, August 22, 2007

An Un Natural Disaster

As I am not an expert in finance and economics, last weeks stock market crash, burp or what ever you want to call it, was just another part of the rollercoaster ride of that is free enterprise to me. Then I began to read about how this particular event was caused and how it is causing disruption and catastrophy in the lives of over 3,000,ooo Americans.
I learned about how the unregulated practice of sub prime lending put these people into massive debt. Millions of Americans were sold on the idea of financing their homes or refinancing their homes with loan deals that were too good to be real. You've heard the ads, little or no 100% financing! No money down! Low, low credit rates for the first 18 months! You could pretend your house was an giant ATM machine and refinamce and get a huge loan.
Of course these products should never have been offered, but the companies and banks proliferated and targeted the lower middle class who saw this as instant credit.
The other side of this golden egg was the black hole of unregulated interest rates charged after the initial period. Most people aren't able to get their credit in order to deal with this reality.
These loans were designed to appeal to people with bad credit. When, as it inevitably would happen, there were defaults, a lot of the agencies began to fail. The repossessions by the banks began, property values began to drop. With the high interest rates and dropping property values, most people owed more than they could ever sell their homes for.
Economists predict that the market will bottom out somewhere in 2009-10 as most of these loans will actually become due next year. This will cause a recession in the stock market somewhere in this time frame and affect markets all over the world.
The most tragic side of this story is a humanitarian disaster that will hit the social fabric of America like another man made Katrina, except the loss of homes, disrupted and destroyed lives are more likely to be blamed by those unaffected as the results of irresponsible choices. There is no inept FEMA ready to provide trailers. This is going to place a strain on the already gutted social services of America.
The unregulated, unethical practices which led to this won't be punished, most bankrupt agencies pick up the pieces and evolve into a new entity.
Another Un Natural Disaster in which the poor are blamed and the Rich have an opportunity to get richer..
I welcome the opinions of anyone who can explain this to me in more accurate terms!


Man with the Muck-rake said...

I said to some person this afternoon who was complaining about the whole mess of politics and the economy, "There used to be ethics with making money when we were younger; now, it's just making as much money as you can!"

Ethics is fading fast in our neck of the woods and, really, it's all about money. Look at the tainted food, the lead-based paint for toys, for example. It's the bottom line, no matter who gets injured. The coal mine disaster in Utah shows a greedy owner using mining techniques that were iffy, just to make more and more money.

The financial market is following along with sub and sub-sub prime loans to people that they clearly know will default, but the lure of the quick dollar masks all responsibility.

And few people give a damn, and not even the Congress much less the White House.


microdot said...

In regards to the mining horror story...any attempt to impose safety regulations and enforce them have been made over the kicking and screaming protests of the mine owners who are still operating in the mind set of 19th Century Robber Barons and as if they are cheifs of their own Meidieval fiefdoms!

steve said...

We're fucked, I'm heading for the hills. (no not really).

Toledo is quickly becoming "crime city". I was driving to my class out at Owens the other day down South to the Expressway. It finally dawned on me that I was in "Bloods" territory- because everyone I seen had some sort of red garb on. Yet all we get from our elected leaders is political maneuvering and bickering; nothing at all substantial as far as making Toledo a better place to live. I saw Ben Kenopf on the news the other night and the poor guy looked so rundown and tired. I remember his campaign; he held so much promise.

What does all this have to do with your post? - Just a symptom of societal decay that our nations policy of "Social Darwinism" has bred. The ship is sinking and all the rats have jumped ship for Perrysburg and Montclova – I hear they might be building a huge multi million-dollar church campus, these rats. That will be a sure way to help the poor and the hungry and the hopeless of Toledo. But who am I kidding, let them fend for themselves, they’re mostly brown people anyway… It’s the American way.