The Banking Bubble
|
Mortgage lending practices have led to the biggest financial disaster in history. Now as taxpayers we
are bailing them out, WHY? There are too many banks. Look at how many shopping plazas sport 2
or more banks. The banking industry has expanded over the years opening branches next to
competitors to gain more customers. In order to gain more customers the banks created loans with
no down payments and accepted applications with poor credit. I laugh when I walk into my bank and
they have signs "Money on Sale" enticing customers to get loans for things they don't need. Push
the consumer to spend more than they can afford. In order to stay in business they have to turn
cash.
Take a look back years ago there were 4 gas stations at every intersection, one on every corner!
Everywhere you looked there was a gas station. For many years these gas giants battled one
another for your business and we used less gas then than we do today. Competition drove many
stations and companies out of business. Today we have 1 gas station every few intersections and
the empty ones have become vegetable stands, convenience stores or been torn down and been
replaced by a drug store. Now drug stores are betting on the aging publics need for drugs. Many
corners at intersections sport 2 or more drug stores as these giants compete for your dollars. In 20
years these drug stores will be closing and giving way to a new trend.
The banking industry is going through the same bubble. With online banking and electronic
payments the need to go into a bank branch has dropped drastically. This trend will continue and
more banks will fail Are they are competing for the same dollar in a weak economy or are they so
out stretched and over branched that there just isn't enough business to go around.
I don't feel that the government needs to bail out the banks putting a tax burden on our children and
now grandchildren. The banks will buy up each other just like the gas stations did years ago. If your
bank goes under the courts will not come and take your house or car or demand your loan to be
paid in full. The loans are just sold off to another bank.
The economy is not that bad. The media paints a doom a gloom picture so you will watch so they
can sell more commercials. The government jumps in to save the banks who made the bad loans
just before the elections. Now our national debt is growing out of hand. Will the government
spending create another bubble that will break?
So what if unemployment is at 5%, 95% of the public is still working. They have the money to spend
but the media scares them by telling them things are bad. Yes there is a large inventory of houses
available on the market. But we also know that is going to grow naturally. As the baby boomer's
start going into retirement homes or start dying off a huge inventory of homes will be on the market.
The generations behind the baby boomer's are smaller and less homes will be needed. Is the
government going to buy up the excess housing to keep prices up? Like everything else housing
inventory falls into supply and demand and so do the prices. New home starts will continue to drop
off. The next wave will be tearing down aging homes and building new ones in their place. By taking
two small city lots and building one home on both lots will reduce inventory and keep builders
working.
There will always be a bubble of some sort and yes they do break. This is something that will always
happen. When you invest in a 401K you are told up front that you may loose your money. You are
giving your hard earned dollars to somebody else to invest. Putting your money in the banks is OK
because it is Federally insured. But who is insuring our government? Our over taxed grandchildren
or China to whom the government is heavily in debt to? Let the pieces fall where they may and we
will put Humpty back together again. Don't leave our mess to our grandchildren and don't sell us out
to China.
Today every Americans liability in the deficit is over $45,000 per person working or not. Instead of
bailing out banks, credit card companies, car manufacturers, and insurance companies the
government should give everyone $15,000 stimulus checks. Many will ad it to their savings accounts
shoring up the banks. Some will use it to pay their mortgage saving their home from foreclosure,
Some will buy new cars which would bailout the auto industry. Others will spend it on consumer
goods boosting the economy. If this would have been done we would be out of the recession and
every American would owe $30,000 less toward the deficit.
|
|
