Economy

The world economy is in peril. The banking system got too greedy and it is going to cost everyone a great deal of hardship. It doesn't help that oil is now at $110. This is causing food prices to soar and that spells trouble for the bottom third of the US population and a great deal of trouble for many second and third world countries. The Fed has stepped in and is making large sums of money available to the banks. What it boils down to is that they made very bad investments and the banks are in trouble of going bankrupt if they don't write down their losses and find infusions of capital. Many people are trying to blame the borrowers who to on these mortgages that they couldn't afford. There was fraud on the part of some borrowers, but I place the blame more fully on the lenders. The "American Dream" of owning a house has been engrained into the public’s consciousness and the banks took advantage of low interest rates to get people into homes they couldn't afford, thinking that the price of homes would continue to rise and everyone would win. Well, as we have learned so may times before, what goes up must come down. I believe that there should be a full investigation into the lending practices and the packaging of these mortgages into funds that were incorrectly rated. There are people that knew this thing was going to blow up and continued to pump it up.

The banks are in a position where they don't know how much they could lose, which is a very bad thing for public confidence in the financial system. I have been talking to some of my banking friends on Wall Street and they say that this situation resembles the 1890s and that it could get really bad.

As I said earlier if it was just the financial sector that was in trouble, we might be able to recover in a couple of years. With oil prices soaring we are headed for a very rough ride that could result in an economic depression.