And the NPR story spoke about Japan’s economic crisis approximately twenty years ago and how the government there had hunkered down and invested in what the people were looking to get into, which was savings mode. And within years of just paying attention and putting it away, the Japanese now have a lot more to work with than before. It was a totally worthwhile listen. On top of that, you can see that with the recent declaration of bankruption by Lehman Brothers (LBC: 0.00 N/A), the liquidation of their assets allowed Nomura Holdings (NMR: 8.30 0.00%) to snap up the Asian arm of Lehman for cheap. Which seems definitely like a return of the 90s again doesn’t it. Remember when the Japanese were buying up buildings everywhere in Manhattan? It seems that they’re cash rich again.

And this time around? I don’t believe that they’re going to make the same mistake twice. Should give those politicians in Congress something to think about when someone’s already paved the way of bad economic plays. Learn from other countries’ mistakes and don’t reinvent the wheel. Because in the end, you just end up with irate taxpayers and corporations that never learn that you have to pay for bad mistakes regardless of whom you know.

Photo Credit: (KRob2005)

Obviously from a personal perspective, I find it an atrocity. The bailout is basically shifting the consequences onto the American taxpayers, while allowing the banks that committed the bad decision making to exist and continue to make bad decisions. On top of that, there are clauses in the current bill that are along the same lines as the Patriot Act as far as allowing the Treasury Secretary to not need oversight. Thanks, but no thanks.

Of course, it didn’t help that CNBC World last night was showing what was going on with Australian banks either. Apparently they’re also looking to offload the “toxic sub-prime mortgages” into the $700 billion bailout. I didn’t know that American taxpayers were going to be paying for world-wide relief either? If the Aussies are looking to do that, then what other countries are looking to offload their debt into the American middle class? And why exactly should we put up with this?

Here’s the deal. Every single country that has encountered economic fiasco has made it through, without a hurried and “cowboy” attitude about how to fix things. Sweden has done it, as has Japan. It’s a long road ahead, but it can be done. But throwing $700 billion USD at the problem in hopes to make it go away is just ludicrous. This is no different than when the Federal Reserve cut rates multiple times in hopes of jump starting Wall Street. After the first few times, it really should start sinking in that it’s not working and maybe we should just ride it out.

If worst comes to worst though? The American taxpayers will get stuck with a huge bill that will take decades to pay off while the rest of the world just gawks in amazement at why we dig ourselves deeper into a hole.

Photo Credit:(Vick the Viking)

What’s interesting here is that there two corporations are not in the same boat as Bear Stearns (BSC: 6.18 0.00%) which was definitely going to financial ruin. Both Fannie and Freddie seem to have decent cash funds and their concerns for a federal bailout are more dealing with how much it’s hurting their area of the market. It’s actually very strange that even with the news that the feds were willing to lend and buy equity in the firms, that it didn’t alleviate the pain.

What’s more disconcerting is how much the Asian banking sector took the hit. Unless these banks have a lot of investment in US properties and these particular firms, I don’t see why they would be suffering on a whole across the board.

Overall, the financial sector has been kissing the floor in the last few months due to the American mortgage crisis and this mop isn’t done cleaning yet it seems.

Photo Credit: (merfam)

There are a lot of things that are contributing to this, but speaking that we’ll be out in a year or two as the fed has said, is severely optimistic. With the ARM fiasco that has taken its hit on the financial markets, that just helped make the numbers more apparent. In fact, there are still indicators that this is here to stay for a while.

The war in Iraq and Afghanistan has been eating away at our national funds. Being that it’s not directly effecting our pocketbooks as a place we can actually feel and touch, many consumers don’t really think of it as a direct correlation. But that’s not all. The food shortages world-wide due to increased transportation cost, which in-turn is being driven by oil prices? With barrels reaching $120USD a barrel as of writing, it’s a wonder there aren’t more theories that oil corporations aren’t puppeteering this entire economic downturn while they just keep raking in the green.

Even Warren Buffett believes that we’re in it for the long haul. And the charts don’t lie. Two quarters with a falling GDP indicates that it might be time for everyone to bunker down. We’ve all gotten through this before, but I wouldn’t doubt that it would last at least twice the time that the feds think it’ll take.

It’s really as simple as common sense. Look at it from this example. If you are currently paying $600USD a month for rent, then equates to $7200USD annually. In three years, you basically have sunk $21,600USD into someone else’s property. If you calculate out putting a down payment of 20% on a house, then this means that you could afford a $108,000USD home.

Worst case scenario, your home decreases in value. Yet, you are still putting that money towards something so you actually own a percentage of your home instead of the green disappearing into oblivion.

It might sound obvious, but buying will always be more worthwhile based purely on the fact that ownership of something is greater than ownership of nothing.

However, there are others that believe that the homeowners (whom are the victims in the whole subprime meltdown) are the ones that should be bailed out. On some level, I agree. There was no reason for mortgage brokers to push ARMs (adjustable rate mortgages) onto those homeowners.

But on another level, I can’t in good conscious actually think that homeowners should be bailed out. Let’s face it. This is no different than if you racked up a large credit card bill and then wanted out because you didn’t know that the percentage was so high that you couldn’t pay. Several questions come to mind when this happens:

• Did you have to buy such a large house?
  
• Did you not understand what adjustable rate meant?
  
• Why didn’t you do the homework on how mortgages worked?
  
• What makes you think you can refinance, when in essence, you’re asking for more credit when you already have a load of debt?

There really isn’t any good reason to even go with an ARM at all unless you’re looking to pay it off, and pay it off quick. And that’s assuming you found a mortgage that had no penalties attached to it.

I hate to say it, but I personally just don’t believe that we should bailout homeowners whom didn’t shop around and/or ask their realtors if they themselves had fixed mortgages or not. In my experience, the most common mortgage seems to be the fixed thirty year. There’s a good reason why it’s the most common.

Yes, homeowners were the victims of predatory mortgage brokers. But we’re also all adults. It’s time people started acting like it.