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Bulletin: President Bush says "Our Economy Faces Challenge"

submitted: Oct 3rd 2008 | by: GeorgeL.Kenney
Total views: 54 | Word Count: 498 | | |

Finally, at long last, President Bush has stepped forward and stated what most of us have known for quite some time. He said "our economy is in danger", and "faces a great challenge." How did this start, where are going from here?

The starting point could have been the beginning and escalation of the war in Iraq. The cost of the war has risen to $10,000,000,000.00 per month, which in and of itself is staggering. The Federal debt is now passed forward through at least three or four generations.

And, as I wrote in a previous article, each additional dollar which the Fed prints devalues each current dollar in circulation. What we have is a double whammy. Not only are we paying for the war, we are losing purchasing power because of the additional dollars in circulation - all ten billion - each month.

Add to this the high risks being taken by investors and investment bankers on Wall Street, particularly in the mortgage sector. Those risks came with huge consequences. As investors continued to lower the standards for home buyers, the ratio of defaults on mortgages rose. Banks and investors who held or were purchasing those mortgages were losing ground fast. But that was well over a year ago.

Then some of those who were directly or indirectly responsible for the huge losses, C.E.O.'s and the like, were asked to leave or left on their own. Of course, they didn't leave paupers, they carried with them large severance packages. But the problems were starting to trickle down to main street.

There are so many events which are coming together now, more powerful than we have faced, as a nation, in the past. Property values plummeted, and when it came time for most people to refinance existing mortgages from three or four years ago, most didn't have money or equity in their homes to pay for their closing costs. And a lot couldn't qualify - new higher requirements - even if they could afford the costs.

People can no longer refinance their mortgage as readily as a few years back, and in essence use their equity like cash in an ATM, which removes tremendous sums of dollars from all sectors of the economy. This slow down of spending or the reduction of the velocity of spending has a ripple effect throughout the entire economy.

Most recently, the Federal Government stepped in to bailout the nation's two largest mortgage purchasers, Fannie Mae and Freddie Mac. We've also seen well established Wall Street firms and some major banks fall. The Fed also bailed out AIG, a infinitely important insurance company for $85,000,000,000.00, and now we are facing a $700,000,000,000.00 bailout.

I have two questions. The first is somewhat rhetorical, and that is; haven't you seen this coming for a long time? The second is simple, given all of these conditions, what are you doing to secure your and your family's financial future.

About the Author

George L. Kenney has a BA in Economics and career of twenty five years in financial services. He is now a successful internet marketing pro, with a passion for helping others live their dreams. He will help you learn how to leverage your time, money, and technology to put you on the fast track to success. To find out more about his team and the Marketing Mentors Program Click Here

Article Source: Unique Financial Articles

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