I’d Like a Big Mac, Fries and 700 Billion Dollars Please…To Go…
What if we couldn’t borrow money? What would you do?
Our economy is hurting. No doubt. I have one opinion on all this. Our money is based on thin air. When I owned my home, I didn’t actually own my home. Where would I come up with $250k to buy a house? No where, so I borrowed it. What happened, when I couldn’t pay for it? The bank took it. Now, we have this idea that bailing out that bank will help me own a home again, or maybe to have never lost it? It’s a head spinning game that needs to stop…in my opinion.
So, what woud happen if we couldn’t borrow money?
I am asking this, because I heard a financial expert speaking yesterday to our current issue. He said that if the bailout doesn’t happen, people can’t buy cars or homes and small businessess will die, because they can’t get loans to pay their employees. And, yes, he said that last statement.
Here’s an opinion. If you have to borrow money to pay your employees…you can’t afford employees.
Don’t get me wrong, I understand the ability to build a business, but I think our country has things backwards right now. A small business owner may think his/her way to success, is to borrow enough money to buy a shop, hire employees and distribute his/her product. My opinion, your product should sell itself. And because of the demand for your product, you buy a shop, hire employees and figure out distribution.
Americans seem to feel that their is some “right” to “possessing” things. We have to own a house, we need to upgrade the car, we need a new TV, remodel, new clothes, and so on. Do we really? Do we need any of it? Is any of it a “right”? We have lost site, in my view, of what is a “need” and what is a “want”.
So, I ask again, what if we couldn’t borrow money?
I am excited for one thing, in this economic crisis. I am excited to see how people will innovate and adapt. I am excited to see what new services or products are formed, because of needing to live differently. I am excited to see what happens to competition and pricing.
What if we couldn’t borrow money? What would be different about your life? And how would it be worse/better?
i’ve got to say man, this is one of the most well-thought-out posts on this i’ve ever seen. i couldn’t agree with you more.
nice work.
joshua´s last blog post……some weeks are worse than others
Much, much better. Well put. The big question is; is it too late to put the genie back in the bottle?
Christian´s last blog post…Different Visions of the Cross
Well, for one thing i would not be living in a house that is currently worth in excess of 20 times what my parents paid for it (including some 20 years of interest on the loan) and would have to find a ridiculous amount of money to pay some rich person’s mortgage. Assuming i could find a place since if no-one ever builds a house until we can pay all the costs up front there would be about 80% of my country living in a cave or a tent.
Credit is not your problem here, Dude… Greed and undisciplined ‘want’ is.
Credit serves a useful function – it permits growth, expansion of ownership.
But there ARE definite rules we all NEED to learn and follow. In this it is exactly the same as owning a gun.
It’s not the gun’s problem people get killed by other people using them – it’s that people don’t learn and only apply the rules when owning one.
It’s not the credit facility’s causing the problem – it’s us schmucks who don’t learn the rules and just see what we want and go for it.
If we listened to people like my parents who always used credit responsibly and waited until they could afford everything but their Home to get one we would not be in this mess today.
We’re human – we’re greedy and make mistakes and rarely understand what we do. (this applies to those ‘in power’ also).
<B
love´s last blog post…love’s Bare Bones Bible.
Joshua, thanks!
C, Not sure we can ever put the Genie back in, but I’m a bit cynical about all of it.
Love, I completely agree that credit, guns, etc, are not the problem. But, credit without money to back it up is. And, I’m not just talking assets. Banks have taken on and promised out too much. They’ve risked money they didn’t have to risk and they’ve lost and because of it, we are losing as well. Many people who properly used the system are losing.
Tammy and I went through that. We properly used the system. We bought according to our income and price range. We trusted the lenders and they lied and in turn they hurt us. But, in the long run, I look back at it and what I wanted and wonder if I “needed” any of it to begin with. I wonder what my life would look like if borrowing or using the system(even properly) would be like.
Obviously life would be better. People live inflated lives.
Of course we would have to sacrifice things like huge houses and expensive educations…but if you think about it…the cost of those things would have to go down.
Tyler´s last blog post…One Spot Left
Wow, what a great thought provoking post!
If we could not borrow money, things would be have to be different.
Our budget would have to be streamlined to only the necessities.
My wife and I learned how to be fiscally responsible early in our relationship. Mostly, we learned how to live within our means. We still borrow money for our house and cars, but other than that if we don’t have the cash, we don’t buy it. Yes, we(our family) all do without the name brand clothes and foods, but it is a much simpler life. Why spend two to three times more on the same thing just with a different label? I suppose if we did not quasi-own(?mortgage) our house we would have to rent. If the banks would not give us our car loans we would be forced to buy less of a car, and not have as much in our savings account.
I think we all will need to face the fact that the economy is going to require us to sacrifice, innovate, and adapt. Like you I am excited to see what happens with all of this.
Keep up the great work, Brent!
bryan´s last blog post…Ready for another day @ school.
Mama has been our ‘Financial Manager’ – we are debt free – at the moment. Credit cards have always been paid off at the end of each month. We were very careful about home purchase. our first home, 1965, we put a third down and paid the balance in 3 years. Our latest car we have had 1 year, we borrowed minimally on that and it is now paid for. You have to work at it – together. No surprise major purchases. Couples need to communicate – about all issues.
Indian Lake Papa´s last blog post…I dreaded Saturday!
If I could not borrow… I would be still renting. We rented an apartment early on and then a duplex. Both were fine and affordable as I recall. We would be driving around heavily used cars and nursing them along to keep ‘em going. I would not have 100K+ of mortgage debt looming over me. I would not need as much life insurance to protect my wife from that looming debt. I would not have gone to a private college.
Back in the day, we had to go to our bank and apply for a credit card with even a low credit limit. The first card I had a $500 limit back in 1984 I think. We did not receive pre-approved credit in our mail boxes 10 times a week and 5 more on Saturday. There was no such thing. When we wanted something at the department store we waited for it to go on sale then we “put-it-on-lay-away” and paid for it slowly … then it became ours only after we paid it off.
Things have changed. Deregulation was supposed to spur competition and the consumer (a.k.a. taxpaying citizen) would be the benefactor. Competition has given way to co-dependency, whereby if one domino falls, they all fall. And it is a little difficult to see who the benefactor is now. Part of me wonders if we don’t need this crash. Badly.
Ric´s last blog post…Rise an’ Shine!
Borrowing money is a bad thing, I agree. But the process is already in place. To crash it now would have long term effects that not everyone thinks about.
I’m sure you’ve all thought about the timber industry, the applicance manufacturing industry etc. What about your local public works? How will they be affected by this housing crash? How will that affect you? What about churches. If jobs are lost, homes are lost, do you think people will be giving $ to churches? Even a 10% minimum tithe would be difficult, if existent at all. That would affect tons of jobs too. It would affect all of those who are depending on churches for a hand up. People who are struggling to buy groceries (who can no longer depend on government subsidaries, because they are overstressed) will depend on the church, but the church won’t be able to accomodate.
It would take a miracle…oh wait…never mind. Delete all the above. I forgot for a second Whom we live for…
mandy´s last blog post…Bailout
If we couldn’t borrow money I’d be less stressed. Fo sho. We have two big debts we’re sitting on (and I’m not counting our ridiculous truck) that I am just chomping at the bit to have paid off when we get our tax refund. I am so dead set on paying those off I have decided to pass up going home next year to visit in order to pay off those. Price I pay I guess. Hopefully there will be money left over and if not, then hopefully we can save enough. But my first priority is paying off those debts.
We have been in a sort of “economic crisis” on a smaller level since we came back into regular air force from recruiting. Imagine your paycheck literally cut in half.
It’s been interesting to see how we do with need vs want. Jake misses going out all the time but I love the simplicity of it. I was just thinking about how much money we wasted before. Kinda makes me sick.
Also, if we couldn’t borrow money I wouldn’t have a ridiculous truck or our camping trailer (which I love actually). I keep saying ridiculous truck b/c I hate that stupid gas guzzler.
Brandy´s last blog post…My Funny Boys
great thoughts…funny quote..
I am hoping for some alternative energy choices from all of this.
Id be ok with not borrowing money if I could get rid of the debt ive already borrowed
klampert´s last blog post…“Cheer Up, It’s Not the End of the World”
Every day I wake up and the first thing I think about is how much money I owe. My thoughts are not on my children, my husband, or even my Savior, but rather on the sick feeling in the pit of my stomach.
Money, or rather debt, is said to be the biggest thing couples fight about and then divorce over. If you lose your credit card, you can’t rest until you’ve found it or cancelled it (and of course ordered a replacement). I just want to be free.
Melinda´s last blog post…Did you see?
There are some great thoughts here, I really appreciate all of you opening up and getting honest like this.
Tyler, that is my assumption as well. If things didn’t need borrowing to buy, prices would have to accommodate or else no one would buy.
Bryan, you said something important that I think takes many of us a long time to learn. If you don’t have the cash, you don’t buy it. I think this is huge wisdom that we all should live by.
Papa, you’ve used the system correctly. It was never meant to drag people along, it was meant for people to get a boost and then leave it behind. And, the communication is key. It is amazing that finances is the number one reason for divorce.
Ric, Haha! I remember lay away. I bought my first keyboard that way. Paid for it for 6 months before I got to even touch it. Also, deregulation…don’t get me started. The final decision always lies with the buyer, but deregulation released a rabid dog and it’s out of control.
Mandy, I love your comment! You bring up the reality of the situation, but in the end you realize, it really doesn’t matter and our God is bigger than all of this. Amen!
Brandy, I think papa’s wisdom is good. Get that stuff paid of and keep communicating between you and Jake, and you guys will do great.
Klampert, I hate debt! But I got myself into it, so i had no one to blame but myself. The alternatives will be interesting, as long as people seek the good and not the dollar.
Melinda, I hare you loud and clear. tammy and I had to file for bankruptcy this last year. It was the hardest financial decision we will ever make, but I would recommend anyone in an overwhelming situation with finances to get some council on it and make a plan. Everything changes. All your priorities change and all your budgets change. But for us, it was the best thing that could ever have happened. Let me know if you need any numbers to call or anyone to talk to. I’d be glad to pass a long the info.
There are small business owners who don’t go overboad like you are stating. Sometimes the rent for a small shop is just as much as buying a place. Then you have the local businesses end up being your clients, who don’t pay their bills on time (LIKE CHARTER and others) which puts a strain on a small business where there are only 2 employees. Just speaking from personal experience is all.
Cheryl´s last blog post…A Thousand Questions….
Cheryl, I hear ya.
I wonder what would happen though if those businesses didn’t produce until they were paid. What if TV was only turned on when you paid. Pay up front and you get what you pay for. That would cancel any chance of late payments.
I wonder what folks like Angie, Alece, and Kristi think when they watch this kind of dialogue. Even our worst is still the rest of the world’s better.
Ha! We purposely didn’t pay the cable just to see what they would say so when we got their “customer call” and told them they were late on paying us, we were told that was a different department.
All of these problems are due to one thing. People who want to play God. Religion, politics and economics will always cause anxiety in everyone, its sickening.
Anyway, we managed to be debt free with exception of medical bills for Greg’s surgery… 4 years later. Ugh!
Cheryl´s last blog post…A Thousand Questions….
oh how could I forget the mortgage… so we aren’t really debt free.
Cheryl´s last blog post…A Thousand Questions….
Dude, I’m so tracking with you on this. The whole point of the thing is to free up the “credit’ markets … and “credit” is what got us into a multi-trillion dollar debt to begin with!
For the Kingdom,
Fred McKinnon
http://www.fredmckinnon.com
http://www.theworshipcommunity.com
Fred F. McKinnon´s last blog post…Worship Books – Which Ones?
Roxanne, I hear ya. I think they would agree that we can do far more with much less than we think. They are truly living what we are talking about.
Cheryl, you guys have done well considering the medical pressure!
Fred, it just doesn’t make sense does it.
(I have tried to add this comment and got an error message so I hope it does not double post)
Brent, you are asking a very important question that we all need to think about.
I agree that too many Americans have borrowed too much money. America collectively, people, business, and Gov’t, all share responsibility. Controls that were put in place to prevent a depression, have been removed by both Democratic and Republican administrations.
I think however, that Capitalism is still the best financial system mankind has created so far. Capitalism is built on credit, no business, large or small, can exist without it. Any technology you can think of was built with credit. Recessions, bad times, are part of the economic cycle, they can’t be avoided. What the government is trying to avoid now is a “depression”, like in the 1930’s.
Even if the bail out does not get voted it is hard for me to believe we are headed for a depression, an unemployment rate of 25%. However, without an infusion of credit the number of unemployed, the number of bankruptcies, is going to significantly rise. The only institution with enough credit available is the US Gov’t. We have already seen the largest bank failure in our history, Washington Mutual, and Wachovia, which had been the fourth largest bank in the country, was just sold for about $1 a share.
With no bail out the unemployment rate may go over 10%. It is a question of how many bankruptcies do we want to endure?
Trying to go to a cash, pay as you go system, does likely mean, imho, going through another Depression, like in the 1930’s. Farmers need credit to buy their seed for planting. Companies need credit to buy their inventory. I prefer to keep our current Capitalistic credit system in place.
ed´s last blog post…Charter For Compassion
The problem is definately greed and the so called 700 billion dollar band aid is nothing more than socialism.
Anyone wanna buy my share of AIG?
scott´s last blog post…Blogged Bible Study – John 11
Ed, here’s my problem with our current system. The government feels it needs to be involved. If the government is not involved, there is no “big brother” to lean on or as k for help. There is no system of covering a fallout, so people are more cautious in their investments. There are no promises.
I still contend that I am not speaking against our system of capitalism, I am speaking against our system of money handling. Capitalism is not built on money that doesn’t exist. Bad loans are. Capitalism is not an opportunity for just a rich man to get richer, it is an opportunity for a small business person to create a great product and make a life for himself. Our system does not protect that. it protects the rich man. Why? Cause the government is involved.
Capitalism is not built on credit. It is built on innovation and hard work. Credit is a tool, not the product.
Scott, I hate band aids. I’ve always been one to just let it air out
Brent, you might be happy to know that one of the “earmarks”, and there are over 300 pages worth, added to the bail-out, to get the House of Representatives to pass it, is for an Oregon company, “Wooden Arrows designed for use by children (Sec. 503)” I believe at least one of the Reps who voted against the bail out was from Oregon.
It was in reaction to the Depression of 1930 that the government became more involved in the US financial markets. Regulations, like the Glass-Stegall Act, which created the FDIC, were designed designed to control speculation by Banks. It was repealed 1999 to de-regulate the banking industry. To get the Government less involved in business.
I hate the idea of owing anybody money. If I did own a business I would probably try to operate as you suggest, on cash not credit.
I can see some advantages to a cash system, such as it might be more stable. It could lead to a slower pace of change, which some people would prefer.
I think growth is likely to be slower because you would need to build up a cash reserve before you could buy new equipment. A new competitor, starting out with the latest innovations, could put you out of business.
I could also mean that in bad times, when you do not have adequate reserves, with not access to credit you are more likely to go bankrupt. The people with the cash to start of business are the rich, a person who inherits a business, or an older person who had worked long enough to save enough money.
I think a cash only environment is likely to work against a young person with a great idea, but no money and the innovator.
ed´s last blog post…Charter For Compassion
Ef, honestly, regarding the earmarks, I don’t think anyone should be handed money by the government. that’s just me though. We need to earn it and when we are able to borrow what we need to move forward. The regulation is key to me. So far regulation has been based on how much return a dollar lent can earn. That doesn’t seem right. As long as banks are considered money makers, we will always have this issue. Maybe the government could just take over banks, loan money at zero percent and all these issues would be gone
I’m opk with slow growth, but it does seem that when a product really connects with society, that there is no way to slow growth down. I believe that there will be businesses that only maintain and that’s ok and others that excel. I don’t think all businesses should have the same options, just because they are a business, I think that the product and the need for that product should gauge the value and worth of a business. That’s what i would like to see us get back to. We are just so money hungry as a country. We think we should be able to make money without working for it. I disagree.
I don’t have much opinion on this do I
Brent, it is ironic that I am defending a system, buy now and pay later, that I don’t follow my self.
I worked at two banks, First Union in CT and Wachovia, that were lead by some of the smartest bankers in the business. They made terrible loans and both banks have failed. It was greed that turned these financial genuises into river boat gamblers.
I can’t claim to be enough of an expert to say that Capitalism could not exist with out the use of credit. You could be right.
I do think the credit markets have helped to built America into the strongest economy in the world, even with all these bankruptcies. However a strong economy in itself does not make a great country.
The focus of too many Americans is on making money and the material goods it buys. We do need to shift that focus from money to people. Building a stable family life is more important than the size of the house we live in.
Your last two paragraphs speak volumes to me. My contention is that we have it all backwards and the cart in front of the horse, so to speak.
Greed is key here. I know I have to make sure I am living without it. When i do, it’s interesting how things that used to matter, just are not that important anymore.
Well, it passed the Senate and it just passed the House. Lord help us. It will be interesting to see what happens. My opinion, absolutely nothing will change and we will be deeper in debt.
I know its just like me to throw a wrench in something..I am good at it
Have you been following the same scenario in England with the B&B? It eerily similiar..and has caused me to step back for the news reports and the press releases and look at both situations…and now my bigger question is..”What is really going on, and when do they think the truth might be a good idea?” just being the 70% later the 30% will be out to play!
darla´s last blog post…Healing, restoration, and a smile
The reality is Darla, as much good as this bailout situation can give, it has completely erased the need for accountability. Banks are given the opportunity to do exactly as they have been doing, which we know is not working and causing issues with the world’s economy.
Seems to me, that in our governments hopes of pushing away a depression, they have chosen to not look at and fix the current systems. A mere band aid, that is going to come off at some point to expose a nasty wound that already exists.
I agree…I am wondering what else is going on in light of the world current events in general…two countries facing the same deal…no doubt there is lots of dirty things going on behind the scenes that will cost the average citizen more than they can pay…I was reading the post on the B&B over at the “frogs” and thought it was about here..ahhhh
just a thought but entertain it for a moment that is all it takes…If I were Al-quaida(sp?) freezing our economy and causing a depression is similiar to us trying to freeze their assets…we all know there are plenty of people who will sell their mother for the right price…just a thought I had when realizing we are not the only country..looks like all countries claiming democracy..and yes our greed plays into it…okay I am done with the hard thinking…love ya have a good day..back to work for me!
darla´s last blog post…Healing, restoration, and a smile