We have a banking crisis, they say. But actually they are wrong. We are wrong. We have a credit crisis, from the overdraft on your credit card (which you intended to pay back by end of next year, maybe) to the car leasing (which would get swapped for another one soon, anyhow)to the mortgage on the house you couldn't afford in the first place (and never intended to pay back at all).
But it is easier to blame someone else, than everybody around you including yourself, isn't it? What is the reality behind the smoke screen of the banking collapse?
What was going on before it all started to crumble? Everybody took out loans, wherever they could, whatever they would get. The easy ones were the mortgages, as the bank had security. The bank assessed the house for its value, obviously on current market value, and gave out a mortgage secure in the knowledge of a surety of value. By lending more and more money to house buyers all the time, the prices for houses went up, which put the assessments of the banks up, which in turn put the mortgage higher. By this process, the lending got higher and higher, the process is known as boom. When the boom stops, because banks stop lending money, it becomes a bubble. House prices stop rising, they even start to fall. Once secure lending becomes insecure, and the sale of the house will not cover the mortgage anymore.
It follows that banks have less money to lend and are less likely to receive money from others, banks or companies. They start liquidating their assets, which means calling in mortgages as well, failing these they take over the houses and put them on the market, depressing prices. It's all a nice little circle.
Is it the banks fault? Yes amongst others. Is your fault? Yes amongst others. Is it the governments fault? Yes amongst others, as well. Actually, the crazy drive to buy ever more unneeded, unnecessary, superfluous, and hindering things has led to this. Don't boo the banker, boo us all.
Will this soon be over? No. The governments all over the world are doing just about everything they can to make it worse. The US, thanks to Monkey Bush, is now so far in debt that future generations can't even repay it. The United States are bankrupt, about as safe a haven as Argentina was. If you still have any Dollars, sell them now, before the whole glittering lie of Wall Street and the so called economy collapses completely. The Dollar, right now, is about as sane and as safe as the Deutsche Mark during the War.
Iceland just went so high in its drive to safe its banks that the country isn't even worth a penny. Actually, you would have to pay me billions to take over a nonexistent economy in full collapse, and speeding up. German government just consolidated its final downfall by following Ireland and Greece into the money trap. And over it all, only the people and voters in Switzerland can say, we said it all before. Since years, the common joke in Switzerland is that the EU will collapse before Switzerland can make up its mind to join. And already the collapse of the Union has started. This means, if you still have any Euros, sell them. They will be virtually worthless once Germany has either collapsed or has gone out of the Euro back into the Deutsche Mark. Buy Swiss Francs (as usual) and Japanese Yen instead.
Should we panic? What for? Things are as they will be, or something to that intent. The classical story is the one from the Great Crash of 1929. Professor Irving Fisher, at that time the best known American economist, held a little speech on the evening of October 23, 1929. He concluded his speech with ‘It is my own belief that unless there is a real panic tomorrow, we shall not see any much further, if any, recession in the stock market.' On October 24, 1929, the panic set in.
The so called science of economy, or rather it's so called scientists, still regard Fisher as the most original thinker of America, and they still use his debt-deflation theory today. So much for expert advice from economists. Forget them. They don't know anything more about it than your aunt Claire. She probably saw it all coming, having been born in 1902. Because the signs were all there, carefully talked down by said experts.
What it comes all down to is Aunt Claire's wise words. Don't borrow. And have your cash under your mattress in gold coins.
