Surprise, Surprise

Turns out that the printing up of over $700 billion isn't going to fix things. A shocker, I know.

The markets continue their volatility and downward spiral today.

Told ya so. Sorry, I'm rather petty when there's something I know better about, which admittedly is a lot of things.

Now they're saying the global crisis is growing and that everyone was expecting the U.S. bailout would fix things immediately. Isn't that the American way? Instant results required with no effort. Isn't that what got the markets into this mess in the first place?

Shocking. Not really.

German banks are now threatening to fail because of this crisis and governments all over Europe are scrambling to put a lid on the bleeding.

When banks lend to risky people, (people with bad credit, living in bad neighborhoods with crappy jobs, etc) they run the risk of bad debt. That has been the policy in the U.S. and other places in the world since the 1970s and now the check is coming due.

Why would anyone in their right minds lend into extreme risk? Either they've lost their minds, or they were forced to. All this Politically Correct garbage we've been drowning in is at the base of most of this bad debt that's been making the rounds for two decades now. As I pointed out earlier, the more bad debt sells, the worse it gets.

Let me try to explain this for those who are scoffing right now.

Say you owe $1 to Bob that you can't pay back. Bob sells your bad debt to John for $.75. You might think "well, now all I owe is $.75." Wrong. You now owe John that same $1, only now the cost of that debt has gone up to $1.75. So, you still can't pay back the debt, so John sells your debt to Frank for $.50. Now you owe Frank that $1, but it comes at a cost of $2.25.

Get it?

Now multiply those figures by tens of millions, to billions of dollars. That's the problem with selling bad debt; the debt doesn't go away, it just gets more costly and gets spread around. Bob and John both lost $.25 and you STILL owe $1. Everyone who buys and everyone who sells bad debt loses out.

When are we going to do something about these criminals in charge instead of simply talking about it?