It’s Like Being Shot With Your Own Gun

wall-stI have been conspicuously quiet about economic downturn, aka Twenty-first Century Depression, but that doesn’t mean I don’t care. Au contraire, I care a great deal. Millions of dollars worth. Yes, a year ago yours truly owned a financial statement stating a net worth in the low seven figures. Not bad, but keep in mind the majority of the balance sheet was in real estate and I’d been plugging away at my chosen career—home design and building for thirty-five years. So in essence, it really wasn’t that much for years of hard work, but then again, unlike the banks, I’m a conservative kinda guy.
data
On the other hand, one year later my balance sheet is in the negative high six digits and growing. In other words I’m being water boarded in a sea of red ink and being sued by a bank who was involved in this mess to boot.

But this isn’t about me. It’s about the banks and by extension the mortgage companies and by further extension, the investment banks. I think it’s safe to say they got not just you and me, but the whole country in a pickle—a giant dill pickle—and unfortunately not just us. The whole world economy is in the toilet as well, thanks to these fast and lose loaners of our money. That’s right folks, these purveyors of calamity strangled us with our own money. It’s like being shot with our own gun.
14banks.cityroom
Our money? True story, it’s not their money they were recklessly giving away over the last fifteen years or so. Banks have very little of their own money and what they do have is supposed to be kept in reserve for times like these. That’s how banks operate—OPM, other peoples money. Your money, my money. I’ll give you an example. Take a fictitious bank. Some guy, call him Mr. Doe thinks he knows how to run a bank and decides to open one. He gets a federal or a state charter and then solicits investors to back him (buy stock) to raise enough money to meet reserve requirements. Then he rents, buys or builds a building and after hiring employees opens his doors and voila, he’s a bank, wise in the world of finance. We the customers, then make deposits in the form of savings and checking accounts in his bank. The bank takes our money and loans it back to us and other customers in the form of car loans, business loans, credit cards, etc.
FILE USA MORTGAGE CRISIS FREDDIE MAC
The thing is banks are supposed to be a good thing. They’re supposed to take our money and make strong, prudent loans charging a few percentage points more for the loan than they pay their depositors and indeed some banks did and still do operate that way. That two – three percent margin is supposed to cover the bank’s operating costs and what’s left over is profit. That’s the way it’s supposed to work and when it does it’s a good thing helping the community and everyone in it grow and prosper.

So what went wrong? I’m not sure, but one thing is for sure, greed is involved along with excess. Every so often, unless held in check by regulations, greed will raise its ugly head and bite us in the rear end, like the saving and loan crises did in the eighties. If you remember, the savings and loan institutions exclusively made non-conforming, non-government backed home loans. When they were wiped out after a round of pigging out after being de-regulated, banks and other investment groups took up the slack in home loans. As it turned out this was tantamount to letting the fox guard the hen house. Only the hens was our money. Oh, sure our money was insured by the FDIC, but the country and world was not insured against recklessness. In fact it was estimated at the beginning of the year that the financial institution sponsored economic sinkhole cost the citizens of our country eleven trillion in net worth. That’s $36,666 for every man, woman and child.

Isn’t life grand?
The Reluctant Republican

September 8, 2009. Tags: , , , , , , , , , , , , . Atrocity, dishonest, economy, politicians, politics.

4 Comments

  1. Amanda Boyd replied:

    Hey Dee,

    I have to agree with you on this one. Once again we are left to pick up the pieces of a broken economy. Its not fair.

    I for one am getting tired of giving money hand over fist to “a bank” because they cant tell what a good investment from bad investment is.

    The sick part about this whole thing is yes I may have bad credit, things happened when I was younger but I am trying to fix it. Now here I am giving you my tax dollar to make your bank work and you wont give me a hand up when I messed up? Where is that fair?

    Or how about the morgage companies who are lending out money to people for houses and then going belly up because their loans are worth about as much as the paper it is written on. Who takes care of that, you might ask…us once again. Its a vicious cycle.

    I don’t know where to stand on this anymore Dee, I wish I knew. I thought I was a moderate, now I’m not so sure. I know I am not a conservative, maybe liberal. Huh, who knows LOL!!!!

    I think until we start to take back our country we will continue to run on our government hamster wheels LOL!!!

    Happy Hunting!

    Amanda

    • Dee Dawning replied:

      Hey Amanda, Liberal. Moderate, Independent, Conservative, we should all be mad. The Big Bamboo will be out November 16th. April Showers, Jan 4th

  2. Sassy Brit replied:

    Makes my blood boil, too! WE should be charging the banks to borrow our money! 🙂

    • Dee Dawning replied:

      Well if they pay interest they sorta are. They still screwed up royal though. Are things as bad across the pond as they are here?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Trackback URI

%d bloggers like this: