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Written by Jamie Deonas

Tuesday, 28 October 2008 07:42

I think we all can agree that September 2008 was a Halloween fashioned nightmare production from Wall Street. Many of us who have been in the financial markets for years, found ourselves looking for answers to problems we have never been faced with before. The credit markets were collapsing and disaster has struck several of the countries largest service firms. Lehman Brothers Holdings, bankrupt. Merrill Lynch bought up by Bank Of America. Washington Mutual disappeared into the jungles of JP Morgan Chase. Even Wachovia found itself unable to recover from way too much debt and too little cash, thus being acquired by either Citi Group or Wells Fargo.

Even our friends Fannie Mae and Freddie Mac suspend their dividends as they were placed in conservatorship. All these companies are well known and several have been in business for 100+ years all gone and never to be heard from again. In Europe and Asia similar disappearing acts are taking place with well established institutions.

My confidence in the American financial system has always been as solid as a rock. We, like many other economies, have had our fair share of ups and downs but have always rebounded on the plus side of business. Has faith been lost in the economy? I don’t believe so. I think people have clearly made a distinction between economy and financial markets, but changes are needed and should be made fast. And then we have to answer the question: So who is to blame?

Sure greedy executives are part of the problem, sure power hungry politicians are part of the problem, sure complacency from all of us and a firm belief that we could borrow cheap money until Kingdom Come is part of the problem, so in my opinion we all are guilty. And now each of us needs to take responsibility and become part of the fix. What we need is more simplicity in our way of doing business and get back to old fashioned long term investing. Speculation should come with much tighter guide lines with returns to tried and true investing methods. We are the ones who should do this and keep government out because ultimately as we found out recently: we are the ones holding the bag in the end.

Over the past 20 years our markets have seen and survived some difficult times. The 87’ “crash”, 1990 Gulf war, 2000 technology wreck and 9/11 and the ensuing War on Terrorism. True to history we have recovered from each of these. Now is the time to work on what you can control. Reduce your credit card debt. Own a car, home and furnishing you can afford. Live more simply or frugal (if you prefer). Drink Hot Chocolate from a Clay glazed mug. It tastes much better than from ceramic Chinaware. With each of us doing our part we can and will see our way through these tough times too.