• Lessons from the Financial Crisis

  Filed under Economy, Finances, Money Saving Tips
  Feb 20

  They say a smart person learns from their mistakes, but a wise person learns from the mistakes of others. That being the case, we should take a look at some mistakes that caused our financial crisis. We should also look at mistakes people made that cost them money in this crisis.

  The biggest reason there is a crisis right now is very simple: people bought things they just couldn’t afford. That’s it. It all boils down to this. The economy looked better than it was because people were spending a ton of money, only the money was on credit. And people got hopelessly in debt to credit card companies. What do you do when your interest payments on your debt are more than you can pay? Answer: financial meltdown.

  People also bought houses that couldn’t afford them. They got caught up in the no money down mortgage scame brought on by Democrats. They created Freddie Mac and Fannie Mae as a way for low income families to buy a house they could never afford. The idea was that everyone deserves a home. True, but that doesn’t mean everyone deserves a house. Everyone deserves transportation, but I’m not waiting in line for a Jaguar.

  All of these people living outside their means was adding up to what we have now. Our economy grew artificially and unnaturally fast. Then it all came tumbling down. One lesson to learn is to live within your means. Don’t buy things on credit cards if you can’t pay off your credit card. Don’t buy a house with mortgage payments you can’t afford. It will only contribute to another crisis.

  But lots of us did nothing to contribute to the crisis, yet we are losing or have lost money too. What gives? Well, there’s a lesson or two to be learned here too. First of all, anyone who claims to be a superstar fund manager or stock broker or some kind of predictor of the market is full of crap. Everyone got duped by these bozos because even a trained ape could have figured out that if you invested your money in anything it would have gone up.

  Anyone who claims they know how the market will operate in the future is as ridiculous as someone who says they know it will rain a year from today. These crooks mismanaged your money and lost it for you. Which is another lesson to be learned- always know where your money is. Keep track of it. Don’t just hand it over to some fund manager or financial advisor without asking questions. Diversify your investments and think long term. It will save you some headaches in the future.

  So what’s to be done? Nothing, nothing is to be done. Nothing ever needs to be done. The market is like the weather. You may say humans created global warming and that we can stop it and have some effect on the weather, but its just not true. Mother nature does what she wants, always has, always will. If you don’t like winter, the government can’t make spring come any sooner.

  And right now we’re in financial winter. This is a big storm, but nothing we can do can make it go away. Just give it time, live within your means, and things will pick up just fine on their own. They always do.

  Tagged as: Economy
  
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