Problems in Lending

Lending Agencies are facing serious issues or are actually going out of business. I find this to be a symptom of our larger problem and the contagin that causes the current crisis.

I will deal with the contagin part first and then will begin to deal with the larger problem.

Yes problems in the lending field are a part of what is causing our current economic crisis. So lets look at some reasons for that.
1. Making bad loans: Bad loans are bad for the person recieving the loan and the company lending. Because the person recieving the loan going to eventually fail in a purchase or even worse a business venture. This sets him back further than he was to start with. Often times when you take on a loan you are in what appears to be a good financial situation but when you forclose you are in a poor financial situation.
The Lender faces a different set of problems. Since most loans default during the first few years they have taken little profit and that is lost because they dont forclose immediately they wait to see if the loan can be worked out. Their payments arent happening and they have a large portion of money tied up that should be making them money elsewhere. Also during the current crisis their other end(the collateral or the assest that is borrowed against) has been decreasing in value instead of improving in value. An example that might hit home is: If you were renting out a house for 1 year and had made a rather large investment in it. You would be depending on not just this years payments but future payments. If instead of having these payments you had only the couple of months payed and then stopped receiving payments. You would be set back a good bit, but you could recover fairly well when you evicted the renter after two months delinquency and got another renter. So you evict them which isnt fun, but are shocked to find that your house has been torn to pieces and requires another loss. Thats what banks are facing. The loans are going bad and the assets are losing value also. Both problems by nature is a crisis.

2. Declining asset value: I have covered this to a degree in the previous section. I will point out a few other angles. Banks are backed by a large amount of assets and are required to keep a certain amount of liquid assets to cover any potential withdrawals or requirements for collateral. You can see that if the overall assets are declining in value this will put a squeeze on the banks value and shrink the pool of liquid money. This is why local banks in areas unaffected by the economic crisis are not facing many problems. Also the banks are sometimes tied to each other with regular loaning between each other that allows them to take higher investment risk. This is just not going to happen now. The interbank loaning for short term needs is down to a minimum.

Now If they dont want to loan money as a result of declining asset values and small cash pools. Normally they raise interest rates and only lend to proven creditable sources. This makes sense because the higher interest rates slows the rate of loans because people want to take fewer loans for higher interest rates. Also the lending to proven creditable sources makes sense because those people or companies who pay their bills do not present nearly as many problems during the periods where their assets are losing value. Why? Because people that pay their bills continue to pay their bills and the assets doesn't have to be sold.

Finally they will require more strict downpayments. Why? because if you payed $20,000 earnest or downpayment you will almost certainly pay the final $80,000 for your loan because even if you couldnt. You could almost always sell the asset for more than $80,000 even if there was an issue. Making declining asset values much less of a concern.

My next blog will deal with this issue further.

Rethinking Economics

I am no expert in any field and yet I feel fairly qualified to question some things surrounding our current economic situation. I will tell you my reasoning for this. First off, I have some significant questions that are not even touched upon by the mainstream media. I think they are logical and the fact that they are not addressed in even a cursory way should concern us all. Second, I have put some efforts into trying to digest much of the information that is presented. Third? There is a third and I believe this is critical. I believe that even people who are very poor in mathematics or handling money, or politics can and should be able to understand much of what is out there. I find that there is this myth that its all too complicated your average joes just cant get it. I hope to debunk that through a series of blogs. I will concentrate on one point tonight.

A scary concept that is part of the new worldwide economy. That concept is that credit is the lifeblood of an economy. On this I mean only to question this and let your decide for yourself.

1. Credit defined-An arrangement for deferred payment of a loan or purchase: there are several definitions but I believe that this is they one that they are using when saying this. In other words they ability to borrow money and set up an arrangement to pay it over a specified period of time(key for later information).

2. What is actually meant here is that mainly large companies are having trouble getting short term loans. This is the first sign of credit problems. Why should this concern us? Well Large businesses are good for their loans so if they arent getting loans it causes issues first because they are used to doing business with these short-term loans but more importantly we must see the reasons for this. The reasons are that the lending agencies are having a shortage on Liquidity(available cash). They cannot make these short term loans because if they do that money will be tied up for a short time and during that time there is a danger that too many people will withdraw in some way too much money. I can explain this much further but the key is...this is considered the tip of the iceberge as far as credit issues.

3. This is my key and I think that although people know this they dont place proper importance on it. The issue? Lending Agencies are facing serious issues or are actually going out of business. Why doesn't the media talk about this as the real problem? I think its because it doesn't fit with the big businesses are evil mentality that many want to tell themselves. You see if a lending agency is having to declare bankruptcy that means that they are not making money. This is one of the secrets to understanding the problem. Lending agencies are companies like any other and they must make profit. If they are not something is wrong. I will attempt to address this in my next blog.

Against warrantless wiretapping?

In the years since our mainstream media drug warrentless wiretapping out on the world stage for all to see, including Al'Qaeda I might add, I've noted that there have been no cases of its use against some innocent American reported by our ever vigilant media.
I view warrentless wiretapping like a gun. Law enforcement need this weapon to defend vs those who would use our modern communications as coordinating devices from all over the world. A gun in the hands of those who would do ill is quite dangerous, but its not the gun that is the actual problem it is those who would do ill with it. So the wire tap is not the problem its those who would do ill with it.
Suddenly i'm a bit more concerned with these wiretaps just as I would be concerned with guns in the hands of criminals. There is some recent evidence that those on the left side of the isle will inappropriately use those things which they have access too. Joe the Plumber had a massive amount of background checks in the days just following his rise onto the national scene. This appeared to be party insiders who wanted to bring down a normal American citizen. Now just imagine if they could tap his phones without a warrant? Would they? All indications are...well I'll let you decide that. Even more concerning is that the MSM seemed to have the same idea as the Democratic party insiders.
Warrantless wiretaps are a scary thought of course but are they the right thing for our country? I believe they are. I recommend you put them in your file of things you really dont want to think about but sometimes are necessary: Nuclear Weapons, Flies, and surgeries.
The greater concerns though are who will be using them. The abuses of these background checks should be a reminder that we should be careful how we vote. As I look back at all the outrage over the pontenial abuses that would come from these wiretaps I'm reminded of the old addages"Whoever smelt it Dealt it" and "The guilty dog barks the loudest" telling us that those who raise the horrible concerns are often those who are thinking of doing horrible things. Who we put in office could be the next person with access to these dangerous weapons. These people should be sober minded and careful. Let us Pray that they will.

Whats so special about Small Town Conservatives?

Today I would like to tell you some things that make small town conservatives and small town people in general, special.



1. Faith: Faith is certainly not shunned. Many of us still believe in God and actually think we can and should reference His laws in our decision making. Our core beliefs affect all our decisions.



2. Personal Responsibility: Many of us can accept our personal mistakes as "mistakes".... things that we could have forseen and therefore could have avoided rather than something that was unavoidable therefore someone else should fix for us. My personal opinion would be that even if we couldnt avoid it others are not responsible to fix our problems.

3. Giving: S0 many of these conservatives are willing to help others often with no credit. Often times they dig deep into their pocket books or more importantly spend alot of time helping others.

4. Love for Country: American pride is still commonplace. Very supportive of troops and many join the military. I will seldom see any negativity expressed toward our troops.

5. Tolerance: I find that contrary to popular belief Small Town America seems to have little intolerance to others

6. Jobs: There are plenty of jobs in small town America. No unions though its on you to secure higher wages with hard work.

7. Friday Night Football: Much of the town will get together to watch the local team play or raid another town during the 11-17 weeks of football for your towns team. We wait for it all year and it makes for a 3 day football weekent for about 1/5 of the year. Awesome thing to enjoy.

I'm sure there are many things I've missed but these are a few of my thoughts about the greatness of small town America.