The Great Depression of 2008? There is that Possibility

At the convenience store today I walk into a heated financial discussion. Folks there were ready to run to their banks and withdraw everything. Earlier at the bank where I cash a couple of checks for pocket change I hear of loan offices being laid off at other banks. The whole community is abuzz with financial fear. Later at a local bar I hear people talking about the Bush Speech last night. How he painted a dire picture of the economy instead of pumping up the troops. This leads me to writing something that hopefully gets read.

If you own stocks you only have lost money if you sell. Buying high and selling low is the first part of the stupidity index. If you own stocks that are depressed due to current events hang on to them. Ride it out until some sanity returns to the system. Never make panic buys or sells.

If you have a loan that is more that you should have undertaken, do your best to to make your payments. It is an obligation you undertook, you are responsible for and you may have options to reduce your payments soon. Walk away from your loan and destroy the property value stealing what you can and you will not have credit and in my opinion, should spend some time in jail. We are all grown ups where credit is involved. If you screwed the pooch overloading your financial butt bring your own Vaseline.

If you have money in the banks or Money Markets Mutual Funds leave it alone. It is insured, it is just fine. If your cash in the bank exceeds the insured amounts, then set up another account at another bank. If everyone runs on the banks it will cripple the economy temporarily, but your money is still safe if it is within the insured amount per account. It ain't the late 1930's we are in the 21st century. Your money is protected this time because it wasn't back then, so just chill.

If you have money in pension, IRA or 401K accounts you will lose some equity depending on how your money was invested. You haven't lost any money yet unless you freak and move the money some place else. There is a difference between equity and cash. Not knowing that difference is part of the stupidity index.

Did Bush paint too dire a picture? I don't think so because it is that dire. Even if your personal money is insured, your livelihood is not. Without properly functioning financial markets our economy will grind to a halt. This is a serious situation that needs to be dealt with seriously and properly. This bail out that I recommend be call the Stupidity Bailout of Ought Eight, is unfortunately required. While it requires a butt load of cash up front the net loss to the average taxpayer will likely be much smaller than it would be if it is not done. These are interesting times, but not a time to panic. If you think a warm and fuzzy speech was in order, your stupidity index just increased.

So what was the cause the problem? Stupidity. Stupidity that started years ago, Stupidity that grew during the infomercial age. "If it sounds too good to be true it probably is." Old school advice that has been forgotten. In 1999 I listened to a Realtor tell a friend of mind to, "Don't put any money down on the house, invest your money in the stock market. You are guaranteed a 20% return on your investment." Stupidity. Some may say it was greed, but it was stupidity.

It is time to get back to the things that made this country great. "Work hard and save for a rainy day." "Don't bit off more that you can chew." If it sounds too good to be true it probably is." Nothing has changed in the markets. Every time Joe average starts thinking he is an investment banker the market goes to hell in a handbag. Was it J. P. Morgan that said. "if doorman gives you stock advice, get out of the market?" Nothing has changed and nothing will until the average American gets back to the basics. Work, save and diversify investments.

Sorry for the rant.