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What Can You Do To Help Solve The Credit Crisis?
Much has been said about the $700 billion bailout. Our financial news is filled with complex terms like “credit default swaps” and “collateralized debt obligations.” Instead of overwhelming you with financial terminology and fear, this blog post is designed to help you figure out what you can do with your money to help solve the credit crisis…yourself.
This is a long post, but I urge you to take the time to read it if you want to know how you can help stop the credit crisis.
Henry Hazlitt Explains The Bailout
Perhaps the most succinct and understandable explanation of the bailout plan is highlighted by Henry Hazlitt in his book Economics in One Lesson. Chapter 14 of his book is called “Saving the X Industry,” and explains an example of a government bailout. It begins as follows:
“The lobbies of Congress are crowded with representatives of the X industry. The X industry is sick. The X industry is dying. It must be saved. It can be saved only by a tariff, by higher prices, or by a subsidy. If it is allowed to die, workers will be thrown on the streets. Their landlords, grocers, butchers, clothing stores and local motion picture theaters will lose business, and depression will spread in ever-widening circles.
But if the X industry, by the prompt action of Congress, is saved–ah then! it will buy equipment from other industries; more men will be employed; they will give more business to the butchers, bakers, and neon-light makers, and then it is prosperity that will spread in ever-widening circles.”
The Argument For The Bailout
Hazlitt goes on to point out:
“We are concerned only with a single argument for saving the X industry–that if it is allowed to shrink in size or perish through the forces of free competition…it will pull down the general economy with it, and that if it is artificially kept alive it will help everybody else.”
This should be easily seen as the argument of those who are in favor of the bailout. In fact, George W. Bush was recently quoted as saying, “With this strong and decisive legislation, we will help restart the flow of credit so American families can meet their daily needs and American businesses can make purchases, ship goods and meet their payrolls. I’m confident that this rescue plan, along with other measures taken by the Treasury Department and the Federal Reserve, will begin to restore strength and stability to America’s financial system and overall economy.”
You might be surprised, then, to know that Henry Hazlitt wrote Economics in One Lesson, not recently, but in 1946.
When Hazlitt was writing this book, a similar proposal was making its rounds in the U.S. government, called “save silver.” The bill was passed…and here’s what happened:
“The United States Treasury was compelled to acquire, at ridiculous prices for above the market level, hoards of unnecessary silver, and store it in vaults.”
Quite like our modern-day equivalent of acquiring worthless mortgages…
What Happens If The Bailout Passes?
Don’t let today’s “no” vote on the bailout mislead you; this isn’t over yet.
As Hazlitt points out, the money must come from somewhere: “The taxpayers must lose precisely as much as the people in X industry gained.” $700 billion is a little over $2000 for every taxpayer in the U.S. That $2000 must come out of your pocket at some point. That is $2000 less than you had before, to spend, save, or invest.
Hazlitt continues: “It is equally clear that, as a consequence, other industries must lose what the X industry gains.” Many of those new taxes, which will be paid by businesses, will mean that those businesses no longer have working capital to invest in new equipment, salaries, or processes. Billions of dollars that could otherwise be used in productive, profitable industries will now be forcibly taken by our government and handed to an industry that cannot survive in its current incarnation.
If you think that jobs will be lost if businesses cannot get the credit they need from the banks, and thus, that this bailout is needed…I assure you that it is guaranteed that jobs will be lost and our economy will falter if this bailout passes, since ultimately it is every one of us who will pay the cost in higher taxes.
What Happens If The Bailout Doesn’t Pass?
This is where it gets more interesting.
Let’s take a step back. Representatives of our government are saying that banks will not be able to lend if they do not have the capital to lend, and that this $700 billion will help them be able to lend again.
Banks make money by taking deposits and then lending the money that has been deposited out to businesses and consumers so they can buy new equipment, such as houses, cars, and machinery.
The Federal Reserve dropped interest rates to a low of 1% in 2003 to try to stimulate the economy. This had the effect of lowering the cost to borrow. It also had the secondary effect of making money in a savings account nearly worthless, since many savings accounts were not even beating inflation.
What did this do? It caused a massive wealth transfer from deposit accounts (such as savings accounts and CDs) to tangible assets such as land, houses, and even art and wine. Many of us shrugged and stopped saving. What was the point? Our money wouldn’t even be worth as much next year as it was this year. But houses, collectibles, gold and silver would. In particular, this caused a massive housing bubble, as housing was one market that was considered nearly infallible.
Banks rode the wave. After all, they were making plenty of money giving everyone mortgages. The homeownership rate hit a historic high of 69% in the mid-2000s, up from 64.2% in 1990 and 55% in 1950. All of those people buying homes (and refinancing since rates were at a lifetime historic low) kept the money rolling into banks. Deposits were dwindling, but the banks didn’t care, since there was more money to be made by selling those same people mortgages.
Ultimately, in 2007, when many of those mortgages went bad, banks had to shore up their loss reserves, and turned to their depositors. The seeping away of bank deposits had gone largely unnoticed. But now banks needed those depositors’ money! That’s why, in 2007, many banks started offering high deposit and CD rates (sometimes as much as 5.75%) to lock in money and shore up their accounts.
The FDIC stepped in when certain banks had so many losses that they could no longer meet minimum Federal requirements for loss reserves. The FDIC helped arrange the sale of several banks, including Washington Mutual, to institutions that desperately wanted to buy depositors (like Chase.)
Banks became afraid to lend to each other since they didn’t know how many unrecognized losses they had in their mortgage portfolios. In the absence of more depositors, the Federal Reserve stepped in and lent short-term money to banks to ensure they would have money to then lend out to businesses and consumers.
How YOU Can Help Resolve The Credit Crisis
I want to give you an example of how we can work our way out of this mess ourselves.
Scenario 1: Hypothetical consumer Ann, in 2006, takes out a $30,000 loan from her local bank in order to make home improvements, such as buying a new roof and installing central air conditioning. Ann agrees to repay the loan over 10 years, giving her a (approximately) $320/month obligation for the next 10 years. The bank now has an additional $30,000 liability, and must carry more deposits to meet loan loss reserve requirements.
Scenario 2: Hypothetical consumer Bev, in 2009, decides her house needs a new roof, and heads to her local bank. Because the value of her house has gone down since she purchased it in 2004, she is denied the loan. Bev decides to take a different track. Instead of applying for a loan, she decides to save $500 a month in a high-yield savings account. Her new roof won’t go on for a few years, but her bank now has thousands of dollars to lend out to another business. At some point (perhaps in 4-5 years), banks reach an equilibrium and loosen lending standards.
Remember, banks make money by lending out their deposits. They may take fewer credit risks than they did in the past few years, but if they have the deposits, they will lend. The problem right now is that we’re stuck in a strange zone where banks have few, if any, deposits, and a lot of bad lending debt.
What About Complicated Financial Instruments such as Derivatives?
I am not arguing that credit default swaps and derivatives aren’t part of the problem. Certainly, a lot of investment banks adopted a “can’t lose” attitude in the past few years, and conjured up overcomplicated financial instruments to pass a debt burden to other companies.
But I also think that in order for us to feel we have control over the situation, we must look at what we can all do differently. Most of us did not save anything over the past few years. We are in debt up to our eyeballs. Is it really going to hurt us that badly if we have to save a few extra years for a new TV or a new appliance? Yes, that means that appliance won’t get purchased right away, but it will still be purchased.
Some of us will lose houses that we couldn’t afford to begin with. But then we will rent, for less money, and have extra money every month to save, invest, or spend. If hypothetical consumer Cara goes into foreclosure on a $2000/month mortgage payment and decides to rent an equivalent house for $1400/month, don’t forget that Cara now has an additional $600/month. If Cara decides to put that money in a safe investment such as a high-yield savings account or a CD, that bank can then lend Cara’s money to another business or consumer. And if Cara decides to spend it, that means more money for many businesses who will benefit from her spending.
We can solve this credit crisis on our own. No one forced us to buy a house or take out loans. We created this crisis by going into debt and ignoring our savings, and we can fix it by starting to save again and by speaking out against insane amounts of debt.
Yes, I acknowledge that that means there will be pain for many of us over the next few years. But ultimately, I believe that a more sound financial system can be built from the ground up out of this crisis — one where we buy what we can afford, and learn to love what we have instead of seeking to constantly acquire more.
Let’s solve this crisis ourselves. Take action! Please Digg this post or recommend it on StumbleUpon. It will only take a few seconds, and it will help others realize that we hold the solution to this problem.
Recommended Reading:
- Economics in One Lesson. Henry Hazlitt explains many common myths about economics. A must-read if you want to know more about governments and bailouts.
- How To Start A Business With No Money. Starting a business doesn’t have to mean a huge capital outlay. Here’s how you can start a business even if you don’t have money to work with.
- Three Business Ideas That Will Help You Thrive During A Recession. Three specific businesses that will do well during a time of cutbacks and belt-tightening.
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28 Responses to “What Can You Do To Help Solve The Credit Crisis?”
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This is an incredible synthesis, Erica! Thanks for summing up all this convoluted recent banking history in a way that makes sense!
I think our entire system has been swamped in debt for way too long, and the banks certainly got themselves in a mess. I can’t believe how this administration *still* encourages us to go out and *spend* our money, our tax refunds, these “economic stimulus” packages… The administration hasn’t helped in this either. I think it’s great that you’re encouraging people to save rather than to get into debt, or worse, make a run on the banks. Sound advice, keep it coming!
Thanks.
Stumbled!
How derivatives derive their value - and their risk. The meat and potatoes of the derivatives business is a kind of forward contract called a swap. The mortgage mess is a magic trick. While we are looking at the mortgage mess we can see by the GAO numbers that we could pay off all mortgages for $536,964,808,868. Or we could pay off those that have just been late in the last 12 months for $227,136,207,581. Simply there is something else the magicians are hiding from us. Credit swaps and Derivatives are usually not kept on a company’s book or annual report. Check out these staggering changes of revenues compared to profit.
2007 2006 2005 2004 2003
Citigroup 80,707 88,453 82,147 78,161 70,419
Net Income 3,617 21,538 24,589 17,046 17,853
Morgan Stanley 28,026 29,839 23,525 20,319 17,621
Net Income 3,209 7,472 4,939 4,486 3,787
AIG 79,600 97,800 108,000 113,400 111,000
Net Income 6,200 14,000 10,500 9,800 8,100
If you look close you can see there was little revenue change but the net income changed in 2007.
nomedals.blogspot.com
Great post, Erica!
The truth is that banks have encouraged consumer to abuse credit. I bought a car on credit a couple years ago, and shortly after said “Never again. Cash only.” So, far I’m sticking to that plan (and I’m one to buy a new car every year or so).
The money sitting in my CHECKING account is earning 3.55%. You can’t tell me I’m better off using credit on something as opposed to just letting the money sit for a few weeks (or months) until I have the cash to buy it outright. Not only does it save me money on interest, but cash also gives me more bargaining power in a lot of purchases.
Nice post! It’s about time everyone has started conserving, having days of instant credit and huge loans behind us should be a relief.
THANK YOU for this!
It’s a shame it had to come to this, but the bright side is that now we are all forced to learn how to manage our finances since we can’t “just charge it” and worry about it later.
Common sense tells us we should always earn more than we spend. How did we manage to suspend reality in our minds while indulging in lifestyles that were counter to this? It was all in the name of prosperity, the “Blueprint for the American Dream” as the administrations called it, and to promulgate the ownership society. I’m not saying that any of these concepts are a bad thing. It’s just obvious that the boat was missed on how to get there the right way.
What we completely forgot about was one of the things that has always driven prosperity in our society: hard work and savings, not gigantic loans with no money down and no assets or credit history to back them up.
Whose parents ever sat them down to tell the story of how they took out a jumbo loan they knew they couldn’t afford just to buy a McMansion on the hillside? No one I know. My parents drilled in me how long they had to scrimp and save for the downpayment and the sacrifices they made to stay good on the mortgage they worked hard to even get in the first place.
Now we all pay for mistakes made and there’s no changing that. So at least we can make an effort not to repeat them and to pay more attention to teaching our kids how work and save for the things they buy.
Great article! My only criticism is that you didn’t really say what would happen if the government does not bail out the banks. While I’m not convinced that a government bailout is necessary, I think there is scope for ’some’ government initiative (most likely non-financial) to boost savings and stop runs on banks. Would love to hear your views on the consequences if the government does not bail out some of these institutions…
Erica,
Very nice article overall.
But…
This statement embeds what I believe is the most pernicious fallacy we have in the current system:
See, everyone assumes credit is necessary. That borrowing is imperative, and even worse, a right. One commenter elsewhere went so far as to assert that without credit, how could young people even start their lives?
What an extraordinary belief!
Credit is used for acquiring leverage. Borrowing money is a gamble. People have forgotten this. And believing young people should start their lives by acquiring debt just seems insanity to me. Most of them already have far too much student loan debt anyway (recourse… the Government always gets it’s cut).
Personally, my answer is to starve the banksters (notice we don’t even give them the respect we used to give bankers, they’re just “banksters” now). I have a running 5 figure balance in my BoA account, with 6 figure cash flow this year. Interest to date? Less than $4. Clowns.
So screw BoA. Let them keep acquiring crapola companies in an attempt to become “too big to fail,” on someone else deposits. I wrote a $20k check on BoA this afternoon to a real bank (Mechanics Bank). And took out a large wad of plain old cash money which I stashed in my safety deposit box (I’ll move into CDs if inflation gets roaring and terms become more agreeable).
These banksters are playing hardball with both my deposits and my tax dollars. I do not see their survival as being in my best interest. And they do need this bailout, very, very badly, as the only real action people can take is to vote with their feet. That is, remove their deposits from insolvent “banks” and put those deposits in a solvent bank, ideally locally owned.
Banking should be BORING. High achieving risk takers need to be building companies that make stuff, they need to be building things people can touch and admire. Risk takers should NOT be attracted to banking for the excitement of gambling with MY money.
By way of background, I graduated high school in ‘78, in the Rust Belt. It probably scarred me for life. People like me, we’re cash hoarders. We’ve been through this and a lot worse already. So I will personally be fine no matter what happens.
Jess:
My retirement plan is to save half my take home pay until I can’t work anymore.
According to current notions, this means “reducing my standard of living.” Yawn.
I recommend this technique. It works really, really well.
To the naysayers, politely request they depart to a substantially warmer climate, post haste. Even better, no need to let anyone know what you actually earn. It’s none of their business anyway. Sure, you can lose “status” in the short term… but in the long term you win in spades.
I won’t get into personal details, let’s just say it’s been quite difficult to find financially compatible relationships among a generation taking entitlement for granted.
Also, with respect to Scenario 2, banks do have the deposits, but they won’t lend because they are already leveraged to the point of insolvency and cannot afford to extend any more credit. They will however, be delighted to acquire your deposits along with billions of your future earnings garnished from your tax dollars.
BTW Erica, this really was a super excellent post and I’ll be watching out for Henry Hazlitt’s work in the future.
Hi all,
Thank you for your excellent comments!
@Cody: Thank you for Stumbling this post. For those of you using StumbleUpon, if you enjoyed this post,
click here to recommend it. It only takes a minute and will help show this solution to more people!
@Rico: I have a car loan outstanding now, and I’m in agreement with you. I plan to pay it off as soon as I have the cash. After next month, the car loan will be my only outstanding debt…I’ve paid off everything else, and I rent.
But getting the car loan was such a hassle that I don’t ever want to do it again. I plan to run this car into the ground, just like I did my last car, and then spend cash on a new one. If I don’t have the cash, I won’t buy it…a rule that more of us should stick to.
@Halcyon: You’re welcome. Good to see you over here.
@Jess: I agree. Easy money has allowed us to have everything now, instead of saving and waiting. I am amazed when I see people complaining that they can’t take out loans to buy a washer and dryer or refrigerator.
I bought a washer and dryer used on craigslist 4 years ago — top of the line at the time — for $600 total, and bought a $160 used fridge for my company’s office when we needed one. It never even occurred to me that I would take out loans for these items — I paid cash for both. Spending thousands of dollars on new appliances when there are plenty of perfectly good used ones out there seems foreign to me, yet this is apparently commonplace. It amazes me.
@Gerard: Great question! I think either way, we’re in for a tough 4-5 years. There will be layoffs, and companies will go out of business. But the government bailout will likely only prolong the crisis by enabling banks that would otherwise fail quickly to stay afloat just a bit longer. Inevitably, the banks will fail anyway — $700 billion won’t be enough, or it won’t go to the right places. I think it’s better to rip the Band-Aid off and let the country heal quickly rather than to aggravate the wound with government funding.
@Dave: I always enjoy your comments.
WaMu/Chase is still holding the doors open on their 5% 12-month CD. I’d consider that if I were you. I have 5 figures over at WaMu (now Chase) and it is my primary bank. I also have some emergency money over at ING Direct since I figured WaMu was likely to bite the dust and I didn’t want to be left without quick access to cash.
Despite the buyout, I have been able to access my account and money, and even my automatic bill pay is staying the same for now. That is what I am doing with my 5 figures of cash. BofA sounds like a waste — they screwed me over years ago, so I won’t touch them anyway. I moved my 5 figures from Wells Fargo to WaMu and couldn’t be happier about that move…Wells was charging me $ every month just to hold an account with them. Blech!
Hold out for the good relationship. Although my boyfriend is not an economist (he’s a math geek), he has been enjoying reading the financial news and has been learning to trade options. He’s also quite frugal, and is happy to cook dinner. So the good ones are out there.
Thanks again!
-Erica
More excellent gems in the comments…
Jason, yes, what you are describing is what is now being called the “shadow banking system.”
Because these instruments are not recorded on the financial statements required by the SEC, nobody knows what they are worth, and they don’t know how much it’s going to cost to get rid of them.
Thus nobody wants their stock.
And we the taxpayers are threatened with penury if we don’t cough up enough to cover the leverage base.
To understand this better, just go to any stock site, finance.google.com is fine, and examine the balance sheet for a company. For roughly 800 companies (all the big investment banks and brokerages, as well as GE and other financial services companies), these balance sheets, statements of cash flow and P&E’s are pretty much fiction, because none of the holdings and transactions of the shadow system are reflected in these statements. I’ll say it again: these statements are pure rubbish. The Dow Jones was very clear in it’s opinion on the value of these holdings this afternoon: 400 point drop in 10 minutes, and 778 point drop for the day.
Bringing the shadow assets and liabilities back on the books is not difficult. Simply record each instrument, asset and liability at what they are worth.
But what are they worth?
Therein lies the rub.
And the “rescue” nee bailout.
One major stumbling block is that the banksters want these accounted as what they paid for them (e.g., “mark to maturity”), not what someone else will pay for them (”mark to market”). Like, listing the value of your 15 year junker as what you paid for it. Absurd.
Since the market won’t buy any of this crap, the banksters are leaning on our Secretary of the Treasury (a bankster himself) to help find a value that’s acceptable (”mark to Hank”). Thus the provision in the bill allowing the Treasury to simply decide what these shadow assets and liabilities are worth.
Damn! I just realized I am thread jacking Erica here…
I could go on. And on. I’ll stop now.
Erica: yeah, it’s going to be 4-5 years I’m afraid. I’m not saying that to anyone I know, they’re having enough trouble dealing with what’s happening right now. But it’s what I believe in my heart.
Elegantly succinct and absolutely correct. Thank you for taking the time to do this right.
Paul
Unfortunately, When lending, banks don’t operate quite the way you describe. Instead, once you sign the paperwork for a loan, the document is monetized and the money is deposited into the bank as a credit and another entry is placed into the liability ledger. The bank will then loan out this freshly created money less its margin requirements. The liability entry is bundled with other debt and sold off to move the debt off the bank’s liability books. The reality is, you are the creditor and the bank is the debtor in this transaction, but you pay PITI as if it were an actual loan, when in fact, you created the money and gave it to the bank.
I’ve been trying to understand all of what is going on for days now (after coming out of the Hurricane Ike haze), and just wasn’t getting it. Last night before I went to bed, I thought “I wonder what Erica has to say about it?” So it was a treat to wake up this morning and find your succinct post that explains it all more clearly than anything else I’ve read in weeks.
I agree with you wholeheartedly. We already discussed it some this summer when it came to housing — I believe we can pull out of this, but people will have to learn to not live a lifestyle of entitlement. We *could* have taken out a mortgage for $80,000 more than we did when we bought our house (we were pre-approved for a much higher amount than we needed) in 2004, but we didn’t. So many people say “Oh! I can spend THAT much! Ok, sign me up!” Of course, I can spot those neighborhoods that the people bought in now 4 years later, as I see all the for sale & foreclosure remnants in them.
People need to learn how to budget. And to spend WISELY. And save something at the same time.
A good solution I read somewhere: “One more stimulus package in the form of a 5-year CD. That would give the lending cash needed by the bank without stealing it from us, and eventually taxes for the government when the CD is up”
I think that would be better than a bail out.
Thank you Erica for a post that at least helps to clarify this complex subject for many of us. Well written. I want everyone to understand the reason government continually pushes us to buy on credit and live beyond our means. If you live within your means you are able to work less or retire at an earlier age. If you do that, the ammount of taxes you pay and the government recieves will diminish. The U.S. Government is in deeper debt than any entity in the history of the world. If people retire early, work less or whatever the government have less tax revenue to pay the increasing cost of funding the HUGE and ever increasing deficits created by the current and past administrations (regimes of terror, if you ask me!). The reason the government encourages you to live beyond your means is that it insures a stable, long term income stream for them to squander. You will be tied to the grinding wheel of work and taxation until you die. We MUST stop this and any other bailouts. Any politician who voted for them or endorses them MUST be removed from office. The sham “sky is falling” mentality and hype does has some validity to it. Fear is how these corrupt politicians and the top 1% keep the rest of us in line. Throw every one out NOW!!!
Erica, you are amazing! I’ve read a lot about the bailout situation, and yours is the clearest, most readable I have come across and a great education (including a reminder to brush up on Hazlitt as we face the onslaught on big, socialist government).
I am a retired organizational psychologist, trained in how to identify high-IQ individuals. If you are not already a member of MENSA, I encourage you apply; you will have to trouble meeting the admission requirements.
Keep up the fine work. You are a blessing! Thanks for all your fine work.
Great post Erica. You might also enjoy Dave Ramsey’s common sense fix:
“We are at a crucial time in our country’s financial history. Congress defeated the $700 billion bailout plan on Monday. However, they are revising it and trying to push it through again. Dave is supporting an alternative plan that will keep our nation from going even deeper in debt.”
Read the rest here:
3 Steps To Change The Nation’s Future
Frank
We Cannot Handle The Truth
What we have here is a failure to communicate.
The facts are that the debt levels of the U.S.A., U.K., Ireland, Spain, Italy, Australia, New Zealand, Canada, and many other European and ‘advanced’ economies are too large to be serviced by the income these economies generate.
There are only two ways out of this:
1.) Debt destruction through default leading to a severe recession or depression after which normal and stable growth can resume.
2.) Postponing the problem by the creation of new debt with inflationary results and the eventual necessity of having the above occur latter.
We must pass through debt destruction now or take on more debt and go through a much larger debt destruction latter.
That is the choice. All the other posturing and spin is bull feces.
Paulson and Bernanke and Cox and Bush and Wall Street and the House Leadership and the Senate Leadership, all hoped they could ‘contain’ the problem until after November 4th.
The only rational solution is the Irish Solution, that is protect depositors and thus stop the bank runs, and let investors take a bath.
Dow 8,000 will happen sooner or latter. It is better sooner than latter.
Erica, your advice is very dangerous.
If everyons stopped spending tomorrow and only saved, you’d go straight into recession. No more consumer spending would mean all the high street shops, manufacturers, and the myriad business to business companies which support them would start making losses. Soon job cuts would be everywhere, even less spending, more companies go down, contracting the economy…
By all means save, but don’t stop spending.
Hazlitt’s theory of letting sick industries fail is just fine and works well. However the banks aren’t just another industry. Lose them, and you lose the oil that lubricates the economy. Everything stops, everyone loses.
Don’t save the banks and you might find that your hard-won savings deposits vanish in front of your eyes…
Dan:
Why should those of us that saved keep spending to benefit those who borrowed?
Those of us who were prudent will skate right through this recession. Or depression. Or whatever. I’m looking forward to more potluck dinners with friends, more time on the weekends to just do nothing, because there isn’t anything to do, overall, a welcome slowdown in the frenetic pace of the last decade.
Personally, I’m cutting my spending to the bone.
Thanks for the good read. Only wish I had wrote it and it was on MY blog ha-ha.
It’s true, we are a nation of credit and debt, a society of “I have to have it right now no matter what the cost… I will pay for it later” that’s what we have become (not me though).
It really is a shame.
Guess no one ever listened to our great grandparents when they talked of the great depression. I guess the lesson from that was not learned.
It may happen again and this time instead of not having money, I think everyone will have money socked back, but will not have food.
Makes you want to go to the store and grab a bunch of canned goods doesn’t it?
Erica - if you like old and profound knowledge like Mr. Hazlitt in your article then you’d appreciate some modern day knowledge that you might want to give to your readers - as an update to your last post.
http://www.globalstockmonitor.com/index.php?id=123
Enjoy and help spread the message - call your congress person and stop this mess…
Hi Erica - I really liked this. It’s a smart explanation of what can be done to solve the credit crisis - that everyone can understand.
I live in the UK and things are no better here. I wound up a business I’d only had for a year and suffered a huge financial loss. I thought my business couldn’t be affected when the housing market bubble burst - but if was, indirectly.
As for car loans etc, I did own 2 cars, one bought with cash and the other with finance. I already sold one and I owe one small finance payment on the other. I plan to sell that too - now I’m working at home, instead of from an office, I don’t need transport for work - I can just use my husband’s car when I need it.
Another way to help solve your own debt issues is to make more. Then try to hang on to it. (and don’t go further into debt)The Debt Eliminator