| HappySqurriel said: Its difficult to say ... In spite of all the great advice our parents and grandparents gave us when we were growing up about living within our means and saving for a rainy day, we’re now at a time where two generations of adults have lived beyond their means and have no savings. Up until a couple of years ago, most of these people managed the unexpected expenses and setbacks in life by tapping into their home equity or taking on more debt. When you combine the lack of savings with the lack of easy to access credit and the loss of equity in the housing market people don’t have many places to go to get more money. The most liquid asset many people still have access to is their stocks, bonds, etfs or mutual funds (inside or outside their 401k/RRSP). What this means is the market will continue to fall as long as the economy continues to get worse, and the people who have cash to make investments at the bottom could potentially benefit by picking up stocks with a 2.5 p/e ratio and/or a 20% yeild. |
Its not really consumer credit that caused this crisis, or even excessive government spending. Those two things certainly didn't help though.
Frankly it was the people who were supposed to be "smart" who caused it, the "geniuses" on Wall Street who bought into the groupthink that you could run your assets and liabilities at a 30:1 margin and that the housing market was a never-ending buffet. There was way too much emphasis on turning a short term profit rather than taking a step back and saying, "Hey, if something went wrong, we would be totally fucked!" The government certainly hit the snooze button in terms of regulation, but that's like blaming the person who sold someone a gun for them committing suicide.
Ironically, this is reflected in a recent poll. Who would have thought that Americans would trust politicians more than Wall Street on the economy! Its a sign of the apocalypse if you ask me:
http://www.cnn.com/2009/POLITICS/02/23/poll.economy/index.html
Poll: Politicians trusted more than business leaders on economy
We had two bags of grass, seventy-five pellets of mescaline, five sheets of high-powered blotter acid, a salt shaker half full of cocaine, a whole galaxy of multi-colored uppers, downers, screamers, laughers…Also a quart of tequila, a quart of rum, a case of beer, a pint of raw ether and two dozen amyls. The only thing that really worried me was the ether. There is nothing in the world more helpless and irresponsible and depraved than a man in the depths of an ether binge. –Raoul Duke
It is hard to shed anything but crocodile tears over White House speechwriter Patrick Buchanan's tragic analysis of the Nixon debacle. "It's like Sisyphus," he said. "We rolled the rock all the way up the mountain...and it rolled right back down on us...." Neither Sisyphus nor the commander of the Light Brigade nor Pat Buchanan had the time or any real inclination to question what they were doing...a martyr, to the bitter end, to a "flawed" cause and a narrow, atavistic concept of conservative politics that has done more damage to itself and the country in less than six years than its liberal enemies could have done in two or three decades. -Hunter S. Thompson
