Financial Crisis

Grandpa was reading the newspaper when he looked around the corner of the pages directly at me. He then put the paper aside, putting his elbows on the table he leaned forward and stared directly into my eyes. Then he spoke quietly and deliberately.

"We have a financial crisis in this country now, boy. The government is attempting to come up with legislation to deal with this to the tune of at least 700 billion dollars. The problem is that everybody is too busy trying to declare blame when they should be working on solutions. From what I have read and heard, everyone is attempting to place blame everywhere but the right place.

The political parties are blaming each other in hopes of gaining the votes of the people. The presidential candidates are doing the same. Pundits are arguing over whether or not there was enough regulation or too much on the banking system that we have in place. There are even charges that it is inherent in the form of economic system we have.

Is it an inherent factor of the economic system? The answer is yes. It is inherent in any and every form of economic system. One reason being is people. Another reason is the nature of economics itself. Neither can be totally controllable.

People are to blame because they allowed greed to be the determinant of their decisions and for this they got spanked and spanked good by the nature of economics. The nature of economics is to correct itself when supply does not meet demand or when demand does not meet supply. This is historical fact.

Now, politicians can show their true stripes. The solution that they come up with will let the people know what their representative is at heart. So, watch him closely to find out if he is a socialist at heart or a true advocate of free enterprise who seeks a smaller government. It will also let you know where that representative places his trust for solutions, in the people or in government. Either solution will result in one thing. You the people will bear the brunt of the financial costs.

Moreover, remember that the people are you, the voter, and the government is your representative, himself. Do you, the voter, have the trust that your representative will make the hard decision, one that may cost him reelection, that is needed in this matter or will he make the easy one?

Who or what is to blame? It is not President Bush. His policies may have influenced the decisions that resulted in this crisis but he wasn’t the cause. Was it government? Government may have influenced the banks to make these bad loans by its regulations but it wasn’t the cause. Was it the banks? The banks may have been influenced by some factor to make those loans but they were not the cause.

Those who advocate for socialism do not tell this part. They promote the concept of socialism by telling you all the benefits it has for the people but they never tell you what the consequences of socialism are and its costs to the people. The blame lies with the people themselves. We now have a choice, hold all of people responsible as socialism would have it done or only hold those people whose signatures are on the loans responsible as free enterprise would have you do. The choice is yours my friends.

The people were not forced to take out those loans. Their own greed induced them to take out those loans. The fact that they went into that bank unprepared does not make them victims of the system. It makes them victims of their own greed. They speculated in hopes of a profit and they were caught with their fingers in the pie.

So, boy, remember this lesson as if it was your only lesson in life. Don’t ever walk through the door of a bank for a loan until you have all the facts down. With the facts you can get up and walk away from a bad loan offered. Without the facts you are depending upon that bank to give them to you and that in itself is a poor decision. This is one lesson that should be and will be stressed all of your life"

I just nodded and said, "yes, grandpa, I’ll remember."