Misery in The Financial Sector

Oct 6th, 2008 @ 3:37 PM by Alden Smith

Today, the government created the Office of Financial Stability. Tonight, the Dow closed down losing a decade of growth. Markets overseas fared little better. Trading was stopped in Russia and other countries because of the current blitz. Losses in India were horrific. Indonesia took a huge beating, as did exchanges in Asia.

We are seeing the fallout from the mortgage market having its lasting effect on all things financial. Consumer confidence is at an all time low. I think it is time that the government realizes it for what it is – a full blown recession. This is being termed as the greatest financial crisis in 80 years.
Research for today showed the following crisis in various countries around the world:

Financial experts in S. Korea are dipping into the world’s sixth-largest foreign exchange reserves to help with loans.
Iceland’s crown, the currency that many investors seek to maximize high yield, dropped 10 percent below the Euro.
In areas of the Gulf, where oil is king, stock markets crumbled and credit conditions tightened due to the large influx of cash from oil.
Viet Nam is withdrawing funds from overseas banks and keeping them closer to home to protect them.

The list goes on and on. NBC Nightly News reports that it will take a while for the $700 bn bailout to take effect. Knowing how the wheels of government turn, this is not surprising. In the meantime, people are hunkering down and sitting on their cash. Many businesses are failing – car dealerships and high end restaurants are going out of business because they can’t sell the fancy SUV’s they once did, and people are finding it cheaper to eat at home.

This post reads like a doomsday letter. In a way I suppose it is. What is so terribly wrong about it is this – the current administration had been warned that fallout from the subprime market was coming, yet chose to overlook it for whatever reason. Now, in domino effect, we are seeing everything falling behind it. Actually, the country is doing well in some areas. But the fear factor, I believe, is driving this, and people are always cautious with their money before anything else.

We need to see some serious regulation and more transparency in the market place. Many pundits feel that banks should be changed back to the way they were in our parent’s day. An entity that made loans, kept your money in a safe place, and doesn’t play around with bundled securities should be the order of the day. I also feel that the stock market should have greater regulation, and speculation in the various markets should be stopped. Some control HAS to be exerted, because it is obvious that left to their own devices, people will take advantage of the system of free enterprise. Free enterprise is a good thing, until you get what we have today. Then, it becomes an evil in the marketplace. Business and economies begin to fail, and Mr. Average American can only head for the safest shelter he can find. Which, in this day and age, ain’t so good, Bub…

Posted in Mortgage Refinancing, Mortgages
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