The world is in a mess. This will not be news to anyone with half a brain cell, I realise. A mess. Financial mismanagement, greed, speculation, bad economic policies and banks which have failed due to all the above and more, and here we are, wondering what tomorrow will bring.
During the night, another bank here was nationalised. The second one so far. Others have merged to save themselves over recent weeks. America's government is wrestling with decisions which fly in the face of their constitution as I speak, and the world's stock markets will either plummet when they open for Monday's trading later on today (the Asian Markets open first), or will level off as a consequence of that decision. For a while.
This is global, people. It may have started in the States, but the ripples have become a global tsunami, sweeping us all up together. Nations all around the world are going into recession, if not depression. The bottom of the housing market has fallen out, and jobs are disappearing. People are losing their homes, and businesses are failing as demand dries up and customers stay home to conserve what little cash they have. Preferrably in a box under the bed at the moment.
I don't talk often here about things like politics and economics, but I read a great deal, and watch and listen, and I think. I have a very keen interest in what is happening around the globe. I have a brain which works very well. Conversation amongst my friends is different, as I am sure it may be with you too. This is the hot topic of the moment. We talk and speculate on cycles in history and what has happened before, and the potential for things to get very much worse in the coming days, months and even years. We discuss the possibility in the future of combining assets and homes to survive. We discuss cost-cutting measures, and share ideas. Every single one of us is working on down-sizing and simplifying our lives.
I have been aware for a good few years that our global economy has been like a runaway train and that the track was running out. Maybe this is where age and experience has a lot to offer. Who was it who said that everyone has a right to own their own home? Most Europeans do not own a home at all. They rent. Who said everyone had a right to more? To whatever their hearts desired? Who started this credit debacle?
When we bought our home, you had to have a minimum of a 10% deposit. Then, in more recent years, people started buying homes with 100% mortgages. Because they "had a right to own their own home". What? That is seriously crazy. Once upon a time, the maximum mortgage you could get was 3 times your gross annual salary. Then it went up to five times your gross annual salary. Again, crazy. Unsustainable. If you buy a home with 100% mortgage and the housing prices fall...... anyone can do the maths.
When I got married, you had second hand furniture, made do with things, and worked to get new carpets, kitchens etc. I am still waiting to get a decent new bathroom, 18 years after moving into this house. You bought things like sofas which you expected to last 20 odd years. Or more. You went to auctions. Now, things have a built in obsolesence, so they fall apart after 7 years. To stimulate markets. Why???
And then came credit. The credit card. Ironically, I still get letters inviting me to take out new credit cards weekly. It used to be daily. Why wait? Buy it now! You can get it! You all know what I am talking about, because every one of us has had them. The news is that new is not better. New is not always wise, and new can be seriously dangerous to your financial well-being. Perfection is something we will never attain, and making do is what we had better get used to, and fast. A perfect home? What is that? All shiny and new? Oh no. People, not things.
Once upon a time, your bank manager knew you. He was in the same branch for his entire working life. He knew all his customers, and their families, and he made decisions based on that knowledge, not on a series of computerised calculations. He advised and he was generally working in your best interests as well as the bank's. Remember those days?
Now, bank employees have targets to meet. They have to sell you stuff, which costs you dearly, and raises their individual salaries. Banking no longer even pretends to be a service, which it used to be, but a money making industry. And if those employees don't bring in the business by selling you stuff you do not want or need, then they lose their jobs. Everything is performance related. Target driven. And all those employees appear to be 12 years old. They don't even know of a world where there was not a credit-driven economy. A simpler world, which I can remember clearly.
Think about it. You deposit your hard-earned money in a bank. They then use it and they charge you for that privilege. Capitalism at work. And I do believe in capitalism, and a free market economy, believe me. But it was what they did with your mortgage and credit debt - selling on and selling on again and again, in the effort to make bigger and bigger profit which was the disaster. Any investor knows that big financial gains come from taking big financial risks. And sometimes you lose, and lose big. BIG.
So we have the catastrophe. And those risk takers may well lose their jobs, and even their golden parachutes too, but they still have their millions paid out in bonuses over the years to cushion their fall from grace. The rest of us are the ones facing the real consequences.
Northern Rock was the first bank to go here, and as far as I, and a great percentage of the population is concerned, the chief exec, as with the chief execs of all those other banks in trouble, should be in jail. Simplistic, but true. The tragic part of all of this is that in reality, if governments were not so focussed on elections and popularity stats, common sense says, let the market correct itself. We would all lose, but the worst would be over, and then we could rebuild, guided by sanity and common sense. Governments around the globe can't afford for that to happen though, through pure self-interest. But history shows quite clearly that, painful though the self correction may be, it is the quickest way to emerge from this crisis.
We have a leadership crisis here in the UK. And an election not that far away. The American election is just weeks away. Whoever becomes President has a formidable job ahead of him. An unenviable job. I wonder if either of the 2 candidates has thought of running away?? People here and there may be tempted to vote in the coming months, guided by fear, instead of reason. This is never a perfect scenario. Informed choice is always better. And to be informed, we cannot be ostriches. We need to know. The good, the bad and the ugly too. Sigh. This is not comfortable. At all.
We have watched trillions being spent on wars, and God knows that money could have been better spent on reducing poverty around the globe, improving healthcare and education, and reducing our reliance on fossil fuels. Climate change. Orphans. Wars. Poverty. Failed crops. Misery. And we have all helped make this happen in one way or another.
We do indeed live in a fallen world.
I am no economist, nor do I hold a string of impressive business degrees. I do, however, have a great deal of common sense, and an awareness of what is happening all around the world. I don't know the answers. I wish I did. All I know is that what is happening is not over by a long way, and it will get a lot more difficult before it gets any better. The temptation will be to focus all our energies on looking after Number One in the days to come. Please make sure you don't forget to focus on your wider communities. No matter how difficult things may get, there will always be others in worse situations. Don't forget them. Be informed.
We all face an uncertain economic future. We may well all end up back in the barter system. Sustainability. Self-sufficiency. Who knows. And I, for one, can see a great deal to smile about that. The circles go around. And my vegetables are growing.
If you made it this far, I am very impressed! There are times when the swirling thoughts have to come out of the head. This was one of them.
Have a good Sunday.