I've watched with some interest the collapse of Lehman and the spectacular freefall of AIG. And while these are certainly negative events, I can't help but wonder if they don't have some greater benefit.
The major reason these firms started to struggle is greed. Over the last15-20 years, we, as a country, have exchanged solid, rational long-term strategy for the quickest buck we can make on that day. We've traded making money the old-fashioned way for shaky get-rich-quick schemes. The concept of saving to purchase something has gone away.
Hopefully we can all learn an enduring lesson from these financial disasters. When the "mortgage crisis" first started to be an issue, I remember a national news reporter breathlessly interviewing a pitiful mistreated borrower who was on the verge of losing her house. She made 40,000 a year, was a single mom raising three kids and had purchased a home that cost more than $600,000. She was lamenting that she could not make the payments and the newsperson was offering her personal outrage at predatory lenders. No mention was made of the fact that this woman should have been SMART ENOUGH to not purchase a home she could not pay for.
Lehman failing is the nature of business. Businesses come, businesses go. Those that survive generally do so because they make an effort to plan long-range.
The most interesting thing I've seen, though, comes from some of the media hand wringing. Take the quote below for instance:
"The credit crunch could get worse," Andreas Rauterkus, assistant finance professor at UAB said Monday. "Banks will be less likely to make loans unless you have good credit."
What I'm trying to see is how this is a bad thing? Banks will loan to people with good credit. People with good credit will be more likely to pay, thus helping ensure the banks viability. People with poor credit will be encouraged (forced) to get their act together as much as possible and not be able to make purchases they can't afford. This is horrible how?
Is it because it denies the basic concept the communo-socialists would have us embrace? A state of equal OUTCOME as opposed to equal OPPORTUNITY?
2 Replies
1705 Views