Panic

The financial world is in upheaval, if you haven't noticed. Many of you might ask why. There are several reasons. Primarily, excessive greed. For years we've encouraged this on wall street. People leveraged profits from everything. Financing with debt and hoping that this financed debt could be passed on at an arbitrage profit. It worked for years. A lot of people got what they wanted and nobody was complaining. Too many people wanted to cash in. Wall Street has for years been where some of the best and brightest go to cash in. Unfortunately, these people might have been too smart for their own good, and everybody else's.

The sub-prime loan is part of the problem and many people are going to blame average Americans for this mess. You'll hear people in the states portrayed as morons for getting these loans by some financial professionals. This isn't exactly the case. One only need ask oneself who thought up these subprime loans. It wasn't Billy Jean down at the gas stations. I'm pretty sure not many people thougt, "Hmmm, you know what would be great. If I could get a giant loan and only pay part of my interest payments. I'm sure my house value will appreciate even though Americas population isn't exactly exploding. If I need it I'll have equity in my house and I can just refinance it again." As we can now see this wasn't a good idea.

In all honesty this has been a great opportunity for me. I've seen, what is being called, the biggest financial crisis since the 1930s first hand. My vantage point has also been particularly interesting. I'm in a country that has experienced phenomenal growth recently. Brazil is also tied somewhat to the US. A lot of people also blame the US for all current financial woes, world wide. For me the main question is, how long will this crisis exist? Are we nearing the end? Did the Fed actions temporarily solve the problem? Will the problem snowball and get even worse?

For me the last questions is more pressing. How did the government magically solve this problem? Did the debt disappear? Unfortunately, I don't think so. IN order to solve he problem it will take time and some self control by all Americans. Americans need to learn to save and focus on growth. Once this happens things should start to improve, I think.