Yeah. And whose fault is that, Mr. Greenspan? Isn't it the fault of the person who cut, and kept cutting interest rates until mortgages were made so cheap?
In any case, no matter who people want to blame, we'll be feeling the repercussions for a long time. We're only feeling the first little wavelets of the storm surge with the current problems. It will probably get much, much worse before it gets better.
First of all, earlier in the year, we've had ten banks fail, everywhere from Kansas to California to Florida, including Bear Stearnes, who managed to find a buyer before they went splat. Fannie Mae and Freddie Mac have been seized by the government.
Today, we were informed that Lehman Brothers, one of the larger (and older) investments banks in the US, filed for bankruptcy because of their role in the sub-prime mortgage mess, and have, in the past year, lost about 94 percent of their value. Bank of America has purchased Merrill Lynch to keep it out of similar straits. AIG is restructuring to avoid bankruptcy.
All of this sparked an epic sell off on Wall Street. The Dow closed more than 500 points down. There's no telling what's coming next.
I'd say that we're about to get hit by another Great Depression, maybe worse than the one that started in 1932, and ended with WWII. Our only hope is for the government to get out of the way, and let the market correct both itself and the mess that governmental edicts have made of it.
History repeating itself all over again. The generation after the depression will not know how to handle a major financial crash. We had a minor one during the 1980's but we bounced back, we still did not learn a thing. What will have to happen before of country wakes up and smells the crap going on.
ReplyDeleteHeinlein said that "A generation which doesn't study history has no past--and no future." We're swiftly headed toward the "no future" stage, on several fronts.
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