If you’re like me, you’re scratching your head about this supposed financial crisis that our country is in. Though the situation is much more complex than any of us who lack a master’s or Ph.D. in economics can probably make sense of, the Cliff’s Notes version goes something like this…some of our biggest financial institutions lent too much money to high-risk home buyers (the catch-phase here is “sub-prime mortgages”).
Lenders took too much risk and found themselves in a perfect storm when housing values plummeted pretty much across the board (the decade-long bubble finally burst) and high-risk home buyers began defaulting on mortgages. Add to this the fact that in recent years these high-risk mortgages were packaged and sold as bonds and you can begin to see how deep the rabbit hole goes.
It was as if these lenders had a refrigerator full of food…only a lot of it was moldy and inedible. The debate now is whether the U.S. taxpayer should bail out these companies for their bad decisions. Your answer to this question largely depends on how free you think the free market should be…in other words, should the government intervene in the market economy, even in situations where millions of investors are at risk and global and domestic markets are losing confidence by the day?
Yet even some politicians who have extremely hands-off economic philosophies have supported the taxpayer bailout. Heck, the Treasury Secretary and the Bush Administration are pushing for it, as are both presidential candidates and well-known investors like Warren Buffett.
I have no idea where I stand on this issue…to be honest. At any rate, on The Dave Ramsey show (from 9/23/08)…he talked about a way to stabilize the economy WITHOUT spending $700 Billion. I found it to be insightful as he explained a little bit of the history of how we got in this mess. If you’re like me, you want to know a little more of what’s really going on…so listen to the Dave Ramsey show by clicking on the link below.