Today's congressional rescue package that earmarked funds from the federal treasury failed. One would wonder what this attempted bail out for the current credit crises would have effected our free enterprise economy. As the dow took a downward record plunge in the face of the legislative failure; I think we can expect more doom and gloom ahead. I'm no seer, but given that global markets are tied to our US market, we may see a global collapse as well.
What I do see though, are vultures waiting in the wings - they always are. Those who have cash ready to profit from losses of those unsuspecting and desperate. They buy up devalued assets, turn it around and exploit these distressed folks. Expect that in a free market, depending on the level of fear and desperation, usury will oppress and interest rates will go as high as the market will bear. I'm old enough to remember rejoicing about having a 30 yr. fixed mortgage at 8.5% interest because what was prevalent at that time was 14% - 17%. It was an ugly season for capital investments.
Relative to what the market will bear, how desperate people are and other factors that plays into it; I think we'll see a 'back to the future' kind of adjustment. Tighter policy on who borrows or qualifies for credit, higher down payments when buying and a return to higher interest rates. All spells a slow down in capital investments - the thing that makes the American dream become a reality for more people. But in order to mend a bleeding artery of our banking system; some serious changes in a consumer's ideology must occur.
Saving up to buy big ticket items, pay off debt, restraints on consumption of goods and services all seem wise in the face of the alternative: becoming enslaved to lenders and vulnerable to the vultures out there. This doesn't sound sexy and I realize my suggestion may trigger a deeper recession. But I'm concerned for us little guys out there who simply want to hang on to what estate we've acquired during a lifetime of labor, hoping to preserve an inheritance for our posterity. These are uncertain times that prompt wise responses to present trials.
And for those vultures ready to take prey; be warned. Immediate gain doesn't have longevity - it will pass to another who makes it right. Perhaps that's happening as we speak - a vindication against those who solicited and oppressed an unqualified buyer. A few years back, I saw the foreclosure monster lurking around the corner when the 'creative' lending practices extended into a new market for homeowners... ARMs, no downs, and (initially) no interest credit cards. Now I sense that we have a runaway train that is out of control.
I hope the congress can come up with a lucrative plan for the poor and needy. I hope it won't be an added burden on the US taxpayer. I hope it regulates the vultures out there and I hope it will manage to engage capital investments that are at the heart of true economic recovery with healthy buoyancy globally. And hope is all I have...because now, what little assets I have are grossly inflated and devalued.
