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Once again, we find ourselves in economic turmoil and this time it is much more widespread than it was in previous years.
Financial TurmoilThe stock market crashed, banks are slated to fail, and the largest insurance company folded. The world's largest banks are seeking other troubled banks to merge with them. Warren Buffet, one of the wealthiest men in the world just invested $5 billion dollars into Goldman Sachs. What does it all mean? What Caused the Crisis?We are experiencing are the consequences of overspending and carrying too much debt. We, in the United States, have been accustomed to a lifestyle of living extravagantly without regard to the amount of debt we accumulate and whether we have accumulated enough savings to endure financial hardships much as we are experiencing today. Does History Repeat Itself?The unfortunate truth about this situation is that it will probably occur again. This is a phenomenon which has occurred throughout history as mankind's nature is one of greed. He seeks to accumulate wealth so that he can spend it on a lavish lifestyle. He lives for today without regard for what may happen tomorrow. Interestingly, the Twenty-First Century is not the first time an economic crisis occurred. In 330 B.C., the real estate market in Greece collapsed after experiencing many years of high property values. It took the country one thouand years to recover. If the people who lost their money had lived another one thousand years, they would have recovered their losses. If they had the technology that we have today, the crisis may not have lasted as long. Larry Burkett, author of Crisis Control in the New Millennium, said, "In the 1770's the British banking crisis was a result of unrealistically high property values, over-extended banks, and a booming stock market." This is the same situation which has just occurred with the American banking system. The trend has been that the system recovers; people enjoy a period of financial gains, and the market collapses again, when property values are too high. Taking Responsibility for our FinancesIn order to avoid the economic devastation that people experience during the aftermath of such experiences, people must educate themselves on the proper way to manage their finances. It is not a good idea to carry heavy debts, but rather to have enough savings that will carry you through the tough times. This means being disciplined about the way that we handle our money and living at or below our means rather than above it. Unfortunately, people may read or hear about the need to plan for the future and avoid debt, but the reality is that some will heed the warning and others will not. Some people will act upon what they read and hear. Others will not react because they do not understand or believe what they read, and others will not want to change their current lifestyles. In conclusion, making wise choices and being disciplined about how we handle our money will help us to avoid or endure another financial calamity such as we are experiencing now.
The copyright of the article The Economic Crisis of 2008 in Consumer Responsibility is owned by Gail Cavanaugh. Permission to republish The Economic Crisis of 2008 in print or online must be granted by the author in writing.
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Nov 26, 2008 9:38 PM
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