Does anyone have a definite answer to the recession that we are currently in? The American Bankruptcy Institute blames the Mortgage Companies, and then they blame the rising gas prices. Then the Oil companies say the value of the dollar is flaking. It’s a big circle of finger pointing.
My answer to the recession is none of the above. I believe the factors of this recession are greed, intelligence and the lack of responsibility.
When the average American gets a bank account, they also have a few lines of credit. Now imagine every American, maybe even the illegal immigrants and foreign nationalists, all having lines of credit through different credit unions and bank branches. Once all those lines of credits have been reached and the bank is stretched to thin they start lowering APR and raising interest charges. Those Unions and Bank branches have to make a profit to pay employees and bills for services (Internet, Phone, etc.). According to a study for the year 2007, there was a 40% increase in Bankruptcy. How can a Credit issuer maintain a profitable income without giving someone the shaft? Instead the federal government bails people that cause this situation and bail them out with tax payer’s money. That money should be put to better use, not to bail someone out because they are not responsible. There is a saying, “those who do not know history are doomed to repeat it.” I believe in this full-heartedly; because, this is the same steps that ended at the Great Depression in the ‘20’s.
Now the Oil crisis… Did you know that when a coal company leases a piece of land that is believed to have potential for mining, the government gives the company 1 year to construct the mine according to safety procedures and actually mine the coal? If standards are not met within the designated time period, the coal company will lose the lease? You would think that the Oil companies are held to the same standard, but they are not. The Oil companies have leases on land that is projected to have oil that they are not drilling because it costs more to construct a well then to bring an old one back online. So these leased lands that do not have any type of well are sitting on paper in some executives desk drawer. Now something that has recently come across my screen, something called the “Enron Loophole” allows investors to play the market to maximize profits from outrageous gas prices.
Now the housing crisis… I was raised on the notion that when you buy a house you make sure that it is 1/3rd of your take home salary so you have money to spare for emergencies and general way of life. Now a days I see people on shows like “Flip That House,” that are buying 800 square feet houses for 500 grand! Now me being on the east coast, I look at that price and my jaw drops. Maybe West Coasters should try it out here in the east. Sorry, getting off track here, when you get a mortgage, what brains are you using getting an adjustable rate mortgage? That just means they are going to stay low just long enough for you to feel comfortable and then they’re going to jam it where the sun don’t shine. Plus, get your yearly taxes factored into the mortgage, so you don’t have to worry about a couple thousand dollar bill coming into the mail when you are at your lowest.
Companies that are getting your money are always going to kick you while you’re down. My advice… put on some protection so it doesn’t hurt as bad….
