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My Crazy Thoughts
Sunday, September 28, 2008
Pray for our Country and it's leaders!
I will be the first to say I have no clue about how our economy works.
I know how my family's does.
We work Hard.
We get paid.
Everything we have ultimately comes from God.
We give back.
We rely on God to meet all our needs.
I did hear a statement from the White House
"I trust the House and Sentate to move quickly with this rescue plan so Americans can have access to the credit they need to continue to live out their daily lives"
Several years ago my Husband and I found ourselves in a Crisis. My Husband lost his job because the company was sold overseas. Mark had many years vested into this company. Loved his job, performed it well, and had a sizeable 401K. We found ourselves in a financial panic. We did not make all the right choices.
We "bailed out" ourselves with our excellent credit.
House payments, groceries, medical bills..underwear,all on credit.
How stupid we were.
I must say we may not have survived had we not had some access to credit. I don't know.
But when I hear my President say "so Americans can have the credit they need to continue to meet their daily needs" It bothers me.
I want to say to my friends don't meet your daily needs with credit!! Okay, I know the average person needs credit for mortage loans or cars...Just don't ever live off of them. It has taken us years to recover from one years mistakes.
I will continue to pray for things I don't really understand and people I only see on the news. I will also pray for you. Times are hard for all of us.
I must say I am so glad that I have HOPE. I know that my future really lies in the God who supplies all my needs...not in wallstreet or main street.
September 30, 2008 at 7:51 AM
To break down a big complex problem down into something that can be simply explained....
From 2000-2005 people were buying homes using "subprime" loans. The reason they were called subprime, is because they were below he normal standards most banks had for a mortgage. (Basicly most loans other than an 80% fixed rate mortgage with good credit would be considered subprime).
Well because people bought houses they couldn't afford, they were foreclosed on. This started happening in late 06, early 07. These foreclosures led to banks having houses on their books instead of monthly cash payments. However at the same time, people across the nation stopped buying homes, and they started to depreciate.
So the banks, unable to sell these homes have no money to lend to people to buy homes.
What this bailout would have done, is provide a baseline value for the bad loans, creating a market for bad debt. And while the Government would have had 700,000,000,000 to spend, the idea would be that others would actually step in to purchase the bad debt before the government had to.
This would return liquidity (cash) to the market, and keeping the current credit crunch from locking up the economy.
Unfortunately our culture makes living w/o credit an impossibility. We have a "keeping up with the Jones" mentality which drives us to spend money we won't earn for another 5 years.
September 30, 2008 at 8:24 PM
Jason,
Thanks for the great info! Much more understandable.
Very very glad we have a fixed interest rate! (6.0 not too good..not too bad)
Have some friends whose payment has gone up by the hundreds.