I’m basically a schnook when it comes to money, not really understanding what went down on Wall Street other than the sensible fact that if you loan massive amounts of money to people with poor credit, bad things tend to happen.

My boy Casey though does a great job of writing a primer on how the banks screwed us over:

I recently used this example explaining things to a friend of mine.  Just to warn you, this is a very simplistic view of how the banking and monetary systems work, but it’s basically the way it goes.  Let’s say you have $100,000, your life savings.  You go put it in the bank to earn some interest.  The bank says they’ll pay you 3%.  The next day, Jim Bob walks into the bank, and requests a loan for $100,000, to buy a house.  Jim Bob has only mediocre credit.  But the housing market has been so great, the bank gets greedy and says, “Hey!  He may not be able to pay, but then we’ll just sell the house for a 25% profit!  Everybody wins!”  The bank tells Jim Bob he’ll have to pay 6% interest on the loan.  He agrees, and the bank gives him your $100,000, and he goes and buys the house.  Here’s the current situation.  Jim Bob pays 6% annually on the loan.  The bank pays you 3% on your deposit.  The bank gets the difference, 3%, as profit.  That’s how they make their money.

Now, Jim Bob was stupid, and got a variable rate mortgage…so as interest rates go back up, his payments begin to go up too.  Jim Bob can’t seem to get enough money to pay his bills, so he defaults on his loan.  The bank repossesses his home.  Poor Jim Bob.  But wait… the bank now has lost the income it was getting from Jim Bob, but they still have to pay you 3% on your money.  They try to sell the house, in order to get your money back, but the real estate prices have dropped, instead of rising, so they can’t get your full $100,000 back.  They can only get $80,000.  In the meantime, you’ve been watching the news, and decide that you don’t want to keep your money in the bank, because you’re scared it will go under . . . and you’ve got a little over the $100,000 FDIC limit in there now, so you better move quick.  The bank only has $80,000 of your money left, so they have to take $20,000 of their own money (or borrow it from another bank) in order to pay you all they owe you.  Imagine this happening nationwide, and you have what happened last Wednesday night.  The economic system freezes up . . . people won’t lend money to the banks, because they’re concerned about them collapsing, and the banks don’t have enough cash to pay out to their depositors.

Go read the rest.

It looks like Wall Street is having a little bit of trouble.

For about 8 years I’ve been warning people here and there that the real estate market was overvalued and would someday result in a massive crash.  Oddly enough my main source of info was a preacher in Times Square, who had been warning of a financial crash for years.  I’ve also read books on the subject as well by experts who were unbiased enough to tell the truth about the real estate bubble, and that the housing market was headed for a severe correction.

Anyone I told though pretty much blew me off, including a coworker of mine who purchased a $300,000 shack with a 40 year variable mortgage.  I told him it was unwise to buy then and that his house was going to lose value over the long run.

Does he listen?  Of course not.  Evidently I’m not somebody worth listening to to since A) I don’t have a girlfriend, B)  I don’t own any property, and C) I don’t have any postgraduate degrees that my opinion should matter to anyone.

How about (D) then:  I was right all along and now you money sluts are finally gonna get what’s coming to you?

Not that I’m gloating or anything. 

On a more sobering note though, I cannot understand why so many Christians particularly were so blind to this (well actually I do understand, since we’re talking about the same people who thought Todd Bentley could shoot lightning bolts of fire out of his cooties.)  The point is, we were not to follow the world’s philosophies about money because we live under different rules.  Paul once said that having food and raiment we should therefore be content.  (1 Timothy 6:8)  I have these things and more, so I never felt the need to invest or save up money to purchase property, or learning about retirement savings or whatever.  These things were all beyond my understanding anyway, so I simply left all those things for God to deal with and take care of.  Even the viability of my blog is something I’m leaving in His hands.  If I prosper, it will be because He blessed the work of my hands, and nothing else.

I’ve also susbcribed to a minimalist philosophy too.  I don’t worry about losing things then because, well, I really have nothing to lose.  After all, if you don’t have it, you can’t lose it.    If you store up your treasures in heaven, then you won’t grieve too much for the treasures you lose here.

Although, I’m pretty sure I’d get really torn up if I ever lost my iPhone.  (If I had one that is.  Hee.)

But all things considered, I’m not going to worry.  Because of God’s guidance and care, I will be debt free and in a position to handle whatever hard times lie ahead.  And not only that, but also be in a position to help others in time of need as well, just like my great uncle did.  He lived during the Great Depression, but he managed to do well for himself and prosper during those hard times, and as a result he was able to help a LOT of people.  If God blesses me likewise, I only hope that I can measure of and be the good steward that my great uncle once was.

Just so long as I’m able to keep a motorbike in the meantime.