An eclectic website about Women, Christianity, History,
Culture and the Arts--and anything else that comes to mind.
We all want to get something for nothing. That's what makes gambling
so attractive. That's also what makes playing the stock market so
attractive. We used to think they were very different, gambling and
the stock market. One was taking unwise chances with our money,
while the other was investing it. But recently there hasn't seemed to be
that much difference.
Stock prices are based on the perceived value of the stocks. In other
words, when things look bleak, a series of chain reactions can make a
drop in one sector bring down other sectors. This is more likely to
happen when stocks have been overvalued. As the old adage has it,
what goes up must come down. As sure as prices rise beyond any
real value of the holdings, a bubble is created which eventually bursts.
The current series of market plunges began with subprime mortgages
in the housing market. When people who lacked the money or credit
to do so sought to buy houses, realtors and lending agencies, eager to
do business, helped them. After all, owning your own house is the
They worked out deals that included adjustable rate
mortages--mortgages with considerably higher payments later in the
life of the loan. That's a gamble that you'll make more money in the
future than you have in the past. But what if you're laid off your job or
health problems bring crushing debts?
To spread the risk, the lending agencies bundled mortages and sold
them to other banks and agencies. With too many foreclosures, 15
banks failed and several others were rescued, causing a panic. In a
global economy, it reverberated around the world.
When the rates reset and the new homeowners failed to make the
higher payments, the banks or other lending agencies foreclosed,
causing people to lose the houses they'd worked for all their lives.
Rather than helping people stay in their houses, the government
responded by offering rebates to everyone, including the lending
What weaknesses in the system and in us brought this on? Part of the
problem was greed, part was the desire to live beyond our means, and
part was lack of foresight.
Our capitalistic economy functioned on the principle that markets were
self-correcting and that regulations were not needed. But anybody
watching the way house prices in Los Angeles, for example, had gone
up would have wondered if those burgeoning prices really reflected
In this month's website, we'll consider greed and excess, our values,
and the Christian and money.
I'd love to hear your reactions to the website, as well as your thoughts
on the financial situation. Just email me at email@example.com.