Blame Canada...er...Government

By now, you should have seen the South Park movie. If not, go ahead and rent it. I'll wait. Done? Good. Like Rick James said, blame is a hell of a drug. Wait, no, that was coke. Either way, blame is just as addictive. Every day we try to blame others for our own mistakes and shortcomings. Why should the credit crisis be any different?

Recently, there have been a host of stories regarding the "credit crunch", "housing crisis", "banking bust", and several other financial issues that all seem to be contributing to a global recession. Now, I'm not economist, but I did graduate high school. In doing so, I had to take some basic economics courses, where I learned that spending more than your income is BAD. But apparently some schools don't teach this, and even more shocking is the fact that it's not common sense.

So, what's the problem with lending money to those that can't afford it? Well, for starters, any mortgage they qualify for is going to be completely bonkers with interest rates, late fees, and of course, quick foreclosure. You see, these people are what is known as "high risk" in the lending circles- there is little to no chance of them ever paying off a debt. So, one day a very smart lender decided to loan lots of these high risk borrowers a TON of money, and then sell those loans to other lenders. He made his money, so he is happy. The other lenders probably figured they were just victimized by a Ponzi scheme, and so they in turn sold the package of mortgages to some other lender. After a few years some smarter lender looked at the loans he owned and probably flipped his lid. Thus began the mortgage crisis.

On the other side of this coin, what's the harm in taking out loans you can never hope to pay back? Well, again, the interest rates will probably bury you well over your head in late notices alone. Moreover, you will eventually be spending every spare cent on your loan payments, and before you know it you will need extra money for some emergency- car repairs, hospital bills, home repairs, etc. These are all things you can count on happening with regularity, and never at a convenient time. So, there you are, a broken down car, no water heater, and then the bomb drops- You've been laid off. Now what do you do? You were barely scraping by before, you have no money saved for this situation, and finding a new job is getting harder by the minute. You, my friend, are going to be the recipient of a final notice to quit. And, as though that weren't bad enough, your credit rating is now through the floor.

I personally do not have a credit card. I find them to be tempting, and I know I will use them for some other purpose eventually. So, I avoid them at all costs. Apparently for me, one of those costs is the inability to purchase a home for myself. Why? Well, credit is a double-edged sword. With too much on credit, you are seen as a high risk. With too little on credit, you can't prove your ability to pay back lenders with regularity. So, it seems people that spend responsibly and are careful with what they do financially are punished for being wise. Then again, perhaps they aren't as wise as I thought?

Now we get to the good part. The blame. These lenders and high-risk borrowers have all blamed the government (pick a government, it's not just the US) for their problems. And why not blame the government? They should be regulating what you spend your money on, and they should regulate who can get loans, right? WRONG. It is your responsibility to spend, save, and manage your money. That rule applies weather you are a bank, a broker, or a consumer. That is how a capitalistic democracy works. Call me a conservative, but I don't need or want the government telling me what I should and should not spend on. Some level of consumer protection is fine, of course- after all, someone will always try to swindle another person. But, at the point where consumer protection becomes protecting the stupid...I'm sorry. They all need to learn a valuable lesson.

And what lesson are they to learn? All around the world government agencies are bailing out these lenders and borrowers. That's right, your tax dollars are buying homes, cars, and other valuables for people that spend money foolishly. Not only is the government bailing out the borrower, but the lenders that initially tried to dupe them into poor financial situations too! And we're not talking a bailout of a few million, either. No, no. This is into the BILLIONS. And that's just for one nation. All of the top-tier countries are doing this, which easily makes the total into the hundreds of billions, and even into the TRILLIONS!

For a bit of prospective, if I were to give you a billion dollars in $100 bills, it would take me 10 million $100 bills. If I could give you one bill per second, I'd be handing you cash for 115 days and just over 45 minutes. In other words, I could give you $360,000 per HOUR for nearly four months! I don't know about you, but my salary isn't even CLOSE to that figure. And that's just a measly BILLION. To get into the trillions I could give you the same amount of money for FOUR YEARS STRAIGHT!! Wrap your head around that for a second. There aren't even a trillion people on earth!