by Alex Hanson
Three dollars,four dollars, five dollars when will it stop? Well my friends the warnings were there, the announcements were made, but brakes, they were never applied. Why stop a good thing, people were buying homes and fulfilling the American dream. New cars were being placed in the driveway of every new home. Oh and the entertainment centers, what good would the home be without one.
The problem with the above scenario was that purchases were being made without the funds in which to back them. What’s your name? Just sign here. That was the motto of the day. Collateral, credit check, income confirmation all not necessary. This I know for I witnessed it first hand. This has got to be a joke, this can’t be for real. Alas it was. One phone call and a $450,000 deal was complete. This is what was transpiring across the US and in some cases if not many, because of the US’s good name, it carried on around the globe.
As in the motto of,” buy what you can afford”, so comes the saying of “reap what you sow. That saying although true does not work in this scenario, for you see those that prospered are not the recipients of the bad crops. We’ve all heard the breakdown from Fanny Mae to Wall Street, derivatives,collateralized debt,loan and mortgage obligations. I liken it to a snowball from hell, there is just no way it can sustain itself, which brings us to our present day scenario.
A time to pay the piper, well so they say, however you cannot pay with monopoly money. In monopoly you can go out buy boardwalk etc. if you run out of money or make a bad deal game over. All you do is press restart you receive a new bankroll and off you go to spend your dough once again. In real life you can’t do that, oh you can change the name, we can call it Bailouts, Cash for Clunkers, Quantitative Easing, or QE2. These were all temporary fixes, never addressing the problem, a problem that only time and real money can fix. The same time that it takes to save monies in order to make solid financial decisions. You can not just print money!
And so now we have arrived, arrived to a point in which we will now reap the benefits of an inept government financial policy. The presses have now been running for well over 2+ years starting with the financial bailouts of Wall street,the government takeover of GM and all the other nice little aids that were provided. Provided through the use of the printing press.
This press was also used to pay our own government debt in the form of buying our own treasury’s. Just listen to that statement in your head “We bought our own debt”, ladies and gentlemen it’s just to ludicrous to make up.
If you take and arbitrarily decide to print money or dollars without a value in which to back that dollar well what would that dollar be worth and based against? The answer was clearly demonstrated this week when Standard and Poors gave the US a downgrade based on the financial models set forth by this administration. Basically a debt with no conceived plan on how to reduce, eliminate, or pay it off. In other words status quo won’t go.
So I ask in plain terms if you take worthless dollars(which I am so embarrassed to admit)and use it to buy foreign goods (which by design we have become dependent on) how can you not expect the foreign items to cost more. Now weigh in, if you are a company such as American Airlines where fuel costs are amongst you’re biggest expenditures, how can you not try and lock in a price buy purchasing fuel at today’s price knowing full well where the price will be tomorrow. And so my friends welcome to our future …….$6.00 a gallon gas if we’re lucky.