Our financial system as we know it is in shambles. The credit markets have frozen, many financial firms are going under and the stock market is an absolute nightmare. This is the worst financial crisis since the great depression. The unfortunate part of this crisis is that it could have been avoided. Greed from Main Street to Wall Street has created this mess and we are now facing the deterioration of our free market system.
How did we get into this mess?
Easy credit, subprime mortgages and greed have lead to this colossal financial meltdown. The mortgage bubble burst thus leaving Wall Street in a panic and the financial sector in ruins.
How do we fix it?
The U.S. government is taking drastic action to try and repair the financial sector. The problem is that the people in power did noting to prevent this crisis and stood idly by as it took place. These are the same people that are in charge to fix the problem. Interest rates have been cut dramatically; there is talk of the government taking an equity stake in some banks. The $700 billion bail-out package will absorb bad debt from financial institutions. Ultimately our free market system of capitalism has failed us and we are headed toward financial ruin due to a negative savings rate and $10 trillion in government debt. I find this very troubling because I am a believer in the free market system. I think our version of free market capitalism will change dramatically in the years to come. This unprecedented government action will alter and change our financial system for a long time to come.