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you got to be ready

November 8, 2007 — Leave a comment

many eons ago i did economics, that by no means makes me a financial expert, but looking at the economy here, has me more than a little worried. and i’m fascinated, especially working in a retail environment, how people continue to spend money.

there are fundamental problems with the US economy and when the curtain is pulled back the middle class are going to paying for it yet again. people here seem to be suffering from short term memory loss, less than 25 years ago the S&L bailout cost taxpayers $125 billion and now we have ARM (adjustable rate mortgage) and NINJA (No Income, No Job, No Assets) loans which have already started defaulting and more than likely in the next 12 months are going to require a massive bailout. 

for those of you haven’t been playing the home game, mortgage brokers betting on an ever expanding housing bubble started to loan money to people who weren’t actually qualified and then in turn selling this mortgages to other companies, who in turn used those as investment vehicles. if it sounds like a glorified pyramid or ponzi scheme, then you’re right, only the first set of people actually made the money at this point, everyone else is screwing the pooch. this is just limited to individual investors at this point, but large multinational and international banks that bought a lot of what is soon to be worthless paper. 

what i’m wondering is how is the middle class going to afford this bailout, a lot of people got caught up in the hype and in just as much trouble as their flexible interest rates start to rise, the US$ continues to lose traction, the cost of fuel and food continues to rise and wages remain stagnant. my other questions is who benefits from the bailout? the people who are going to lose the houses the shouldn’t have qualified to buy in the first place or the companies that brokered these loans? and isn’t that taking from the not as well off to give to the worse off or in some cases the very well off?  

i`m fascinated by many of the dialogues i see occurring here on journalspace, if this keeps up, i think the posts are going to get more interesting as the elections draw near.

i can`t say i`m an entirely impartial observer but i would like to believe i have less of a bias; this may or may not be true, but i do have is the benefit of a completely different historical frame of reference. i grew up in the Caribbean and had some of the best history teachers in the region. the scope of our studies encompassed from the native American peoples; Caribs, Arawaks, Azteks, Incas, Mayans to Caribbean independence.

one of the interesting developments in the course of Caribbean history has been US intervention. during the Wilson administration the US intervention in Latin America was at an all time high and set the stage for the Batista, Trujillo, Duvalier and Samosa regimes. none of this seems widely know in the US outside a few scholarly texts.

all history is revisionist, the winners get to write it, but as the adage goes, those who forget the past are doomed to repeat it.