Confused about Financial Crisis?Posted: September 24, 2008
Are you like this baby, who is confused about all this talk of the Financial Crisis?
Read this article to get caught up on what is going on!!!
Here are some of the things they talk about:
1. It all began with cheap money. To prop up ailing economies early in this decade, central banks in the U.S. and Japan kept interest rates unusually low, which encouraged speculation. In the U.S., the Federal Reserve lowered the federal funds rate — the rate that banks charge each other for overnight loans and a barometer for the cost of borrowing money on a short-term basis — from 6.5% in 2000 to 1% by mid 2003. Cheap money quickly ignited a sharp rise in home values in virtually every corner of the country.
15. Don’t lose hope. A financial panic causes people to lose their ability to reason. But just because a panic can end in utter economic disaster doesn’t mean that it will. Just as banker J. Pierpont Morgan could quell the Panic of 1907 by walking onto the floor of the New York Stock Exchange and buying bank stocks, so too could decisive government action contain the Panic of 2008. You may not know the outcome of this drama for weeks or months to come. Until you do, the best course of action might be … to do nothing.
You will feel smarter after reading it. Trust me.