Financial Storm

Here we go again. I promised myself I would not blog about the financial crisis again until there was some light at the end of the tunnel. Well, there is light, but it appears to be a freight train. I feel like the alarmist town crier, hustling newspapers with bad news. But unfortunately folks, we have had nothing but bad financial news lately.

Another One Bites the Dust

Last night, Washington Mutual was seized by government regulators and JP Morgan Chase agreed to buy the assets of the financial giant. Under the arrangement, Chase will pay the Federal Deposit Insurance Corporation (FDIC) 1.9 billion dollars and will acquire 307 billion in assets and 188 billion in deposits. This is the second major acquisition by Chase in the last six months, orchestrated by the government. In March, the government cut a deal in which Chase acquired Bear Stearn’s. WaMu’s failure marks the 13th bank to go under this year.

Congress To The Rescue

Maybe, just maybe, this will encourage Congress to stop bickering over the bailout plan and actually do something productive for a change. These guys and gals need to put aside their partisan objectives, special interest appropriations and get busy with an effective plan to steer us clear of the impending financial doom.

Everyone from Warren Buffet to Henry Paulson to Ben Bernanke seems to get it. Heck, even President Bush warned in his address to the nation that “Our entire economy is in danger”. Buffet reportedly urged Congress to act quickly and avoid an “economic Pearl Harbor”. Menacing words from the worlds greatest investor. It will be interesting to see if our elected officials heed that advice and work out an emergency package pronto.

Lock 'em Up!One of the early sticking points has been the Bush administration refusing to place language in the package denying the executives of these failed companies from exercising their “golden parachutes” and collecting 10’s of millions of dollars in bonuses. WTF?!? Why would you pay anything to those responsible for bankrupting these companies and nearly causing the collapse of our entire economic system? Looks like a “no brain-er” to me. If anything, these jokers should have to pay back some of the monies already earned as restitution to the citizens who have lost their life savings, retirement plans and jobs, as a result of their misconduct. Can you imagine getting a big fat bonus at work for bankrupting your company? Of course not! These folks are sub-human excrement, found somewhere between pond scum and bottom sediment. Show no mercy!

What’s Another 2 Trillion?

As an average Joe, it makes me sick to my stomach to think we are going to spend 700 billion to bail out a bunch of irresponsible yahoos. 700 billion on top of the 800 billion already committed to Fannie, Freddie and the huge bailout of AIG. Most experts think this whole corporate welfare package will cost upwards of 2 trillion dollars. 2 FREAKIN trillion dollars. I guess we just add that to our 9.6 trillion dollar national debt and our 53 trillion of unfunded obligations. And where are we going to get this enormous sum? Why we will borrow it of course! It’s the American way. And who will we borrow it from? Probably the Chinese. You know, that giant communist country that couldn’t conquer the world militarily, but is doing a fine job of crushing us financially. So the next time someone asks “Who’s your daddy?”, just remember, it’s China baby!

How Did We Get Here and What Happens Next?

I don’t think anyone has an exact answer. Years of deregulating the banking system probably has not helped. If you leave the fox to tend to the chickens, he will slaughter the chicks. I am not for large scale government intervention in business. By no means. But when you have banks loaning hundreds of thousands dollars to anyone who can fog a mirror, regardless of ability to repay, perhaps some oversight is warranted. I am also not in favor of government bail outs of private sector business. That being said, I don’t think our economy can withstand the huge impact of all of these financial institutions failing. It looks like we don’t have a choice. We are almost definitely going to face hard economic times ahead. This government rescue package is no guarantee that we will advert recession or possibly worse, but it will probably soften the blow. Time will tell. If we manage to pull out of this, we will probably hear 10 years from now how close we came to a total economic collapse. And if we experience a total economic collapse, God help us.

So What Can You Do?

Quite honestly, not much as far as the crisis goes. It is in the hands of our trusted government and the balance of the financial giants left standing.

Personally, there are a few things I would recommend YOU start doing right away. Get your financial house in order. Reduce unnecessary spending. Put yourself on a budget. Start saving. Seriously.

For more information, check out these previous posts:

8 Steps to Recession Proof Your Finances

5 Ways to Recession Proof Your Job

5 Tips to Cut Your Grocery Bill Today

Also, here is a great post from my online blogging friend Mike over at LiveLife365:

How To Survive an Election Year Financial Meltdown

And finally, here is a great resource for getting you financial life in order:
The Total Money Makeover: A Proven Plan for Financial Fitness by Dave Ramsey

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