I sometimes wish I had a crystal ball so I could see what was coming up in the future. It is really something out there. I don't need to link the stories. Investment banks failing. The government buying AIG to save their ass. The financial crisis not only rocking this nation, but the world is something. I've heard it described as the worst financial crisis since the 1930's, if not worse than the 1930's. Where this crisis is going to end and when would really be nice to know. What the world will look like at the end would be nice to know too.
Okay, I know this whole crisis seemed to have started with the burst of the housing bubble but it has gone well beyond that now to a complete lack of confidence in the whole financial system. The housing market was over leveraged and now any financial instrument that is over leveraged is vulnerable to collapse as we have been seeing.
So this really makes me wonder, what is going to happen to those agricultural producers out there that get their financing through a non-traditional bank, i.e. one that does not accept deposits. I know quite a few producers that get their financing this way and it really makes me wonder when this source of credit will dry up for these producers. I have been hearing rumbles from some of these guys that their "bankers" are demanding a certain number of dollars for their calves and if they don't get it they will be foreclosed upon. Most of the times these numbers are well over what the market will support right now. These guys sound like they are in real trouble to me. Is this a side affect of what is going on in the financial markets? It would be curious to know.
I'm not overly worried about my financing. I finance through a traditional deposit bank and the banker is not worried about my situation. With the markets the way they are I might be down a little this year but it is not a problem. I really wish I had that crystal ball though to see the future. What is going to happen out here in the country? Will this financial crisis bring down farms and ranches? Why am I not hearing the presidential candidates talk about this crisis. The whole thing might be a little esoteric but it is going to affect us more than anything else that is going on in the world in quite a while. It's probable worth more than a soundbite, don't you think?
Thursday, September 18. 2008
Crystal Ball
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Trouble
I see that the problems with the financial system have now caused problems with Farmer Mac. This is where non-traditional banks get their financing in the agricultural sector that I was wondering about a couple of weeks ago. This info doesn't make me fe
I see that the problems with the financial system have now caused problems with Farmer Mac. This is where non-traditional banks get their financing in the agricultural sector that I was wondering about a couple of weeks ago. This info doesn't make me fe
Weblog: Thoughts from the Middle of
Tracked: Oct 02, 05:42
Tracked: Oct 02, 05:42
2) Our Government (Rep's & Dem's) wanted EVERYONE to have a chance at owning a home and so regulations that are on the books and laws have been "overlooked" or "pushed" to the limits, so EVERYONE bought a dream home way more than they could afford. Then came the day of disaster the stock markets corrected (like they do every 8 to 10 years or so) and boom home values dropped adjustable mortgages kicked up and no one could afford their homes any longer.
That is what happened period, dot, done.
BUT, no instead of foreclosing and SELLING the homes (by the foreclosing banks) the Government (our government) started talking about "bail outs" helping these poor, misunderstood homeowners out from those big bad bankers. Wrong move.
The banks hung on to the foreclosed properties, values of the properties were set at ZERO yep ZERO they had NO VALUE and so the banks waited for the Government bailout, but the loans the banks got to provide the mortgages came due and the banks hadn't sold the properties so they couldn't pay their bills and they went under.
Now the government did try to assist the people who actually lived in the homes but if they couldn't make a 6% interest mortgage payment well out they went. Now we have thousands (I hear 100's of thousands) of homes not occupied, not up for sale and banks going under. A Government Resolution Trust type company is being created to purchase the home from the banks and THEN the homes will be given a value and sold, more than likely for a huge loss. All backed up by you and me the US taxpayers.
What should have happened, tighter restrictions on buying a home up front would have kept this mess from starting. Second, banks should have foreclosed and SOLD the properties immediately when the homes were of greater value, but HEARING of a Government bailout gave the banks hope that NO LOSSES would occur. Except to the American Taxpayer.
Mistakes all around, illegal no probably nothing illegal but kind hearted elected officials wanted everyone to own a home even those who could not afford one. So we have a mess and blame will be assessed, but truely it was a SOCIAL EXPERIMENT gone wrong.
Now everyone wants to do business in cash, upfront and with no credit allowed signs. This to shall pass but like heart surgery, very slowly and very very painfully.
MOO,
Mike Desmond
backed up by Ziggy and Calvin my two cats.
Mike Desmond's point 2 is right. The idea that everyone has a God-given right to own a home is just crazy.
The people who are defaulting are those who couldn't get their lives together enough to qualify for traditional financing. They should have stayed in rentals. Renting is great for (a) people who can't get their finances together to buy a house, and (b)people who don't want the expenses and responsibilities of home ownership.
I am afraid this is going to cripple America for awhile. Meanwhile, the profits of oil-rich nations soar and they flex their muscles. We desperately need to stop spending so much money outside of the USA for petroleum. It is worse than pouring money down a rathole.
I'm guessing that we may end up experiencing some sort of recession at best for a while. The S&L Crisis of the 80's gave us a 3 year recession, so I don't see us getting out of at least that.
Not everyone is going to own a home, no matter how hard the Gov and the Banks try to make it so. Hopefully, they've all figured this out by now, and stay the course with the standard 20% down and good credit requirements from here on.
I am glad you posted. I know how hard it is as I let mine go, such as it was. But if nothing else, put one of your awesome photos up now and then, would you?
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