Spending Your Way Out of Trouble
The world’s financial problems came about by having a government push financial institutions into providing home mortgages to people who would not be allowed to hold a credit card in a third world country. These mortgages were invested in by a wide range of outside companies without anything approaching due diligence. These companies include insurance firms and private pension funds who should have known better.
Long after it was obvious that there were looming problems with the so-called “sub-prime” mortgages investors (generally using other peoples money) continued to buy in. When the penny finally dropped there was such enormous exposure from financial institutions that many of them needed to be bailed out with government money. It sort of makes you wonder why these firms payed big salaries to their financial people if they couldn’t see this one coming.
After throwing money around like drunken sailors to “stimulate” the economy the world’s leaders including Obama, Brown, Rudd and many others are still wondering what to do next as they have to keep the money printing presses working full time just to pay for what they have already spent.
Perhaps they should take a look at history, particularly the quote below.
“The budget should be balanced, the Treasury should be refilled, public debt should be reduced,
the arrogance of officialdom should be tempered and controlled, and the assistance to foreign
lands should be curtailed lest Rome become bankrupt.
People must again learn to work, instead of living on public assistance.” ~ Cicero – 55 BC
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