Let's talk about money

"The Fed normally responds to economic problems by cutting interest rates — and as of yesterday morning the futures markets put the probability of a rate cut by the Fed before the end of next month at almost 100 percent. It can also lend money to banks that are short of cash: yesterday the European Central Bank, the Fed’s trans-Atlantic counterpart, lent banks $130 billion, saying that it would provide unlimited cash if necessary, and the Fed pumped in $24 billion.

But when liquidity dries up, the normal tools of policy lose much of their effectiveness. Reducing the cost of money doesn’t do much for borrowers if nobody is willing to make loans. Ensuring that banks have plenty of cash doesn’t do much if the cash stays in the banks’ vaults.

There are other, more exotic things the Fed and, more important, the executive branch of the U.S. government could do to contain the crisis if the standard policies don’t work. But for a variety of reasons, not least the current administration’s record of incompetence, we’d really rather not go there.

Let’s hope, then, that this crisis blows over as quickly as that of 1998. But I wouldn’t count on it."

The past two weeks have been bumpy for investors. Even if you don't have skin in the game per se, you will affected indirectly, through higher prices, or inability to get credit.

Finances is the one subject, we as a society fail to discuss openly. Talk about family secrets. People live in expensive trappings but work wacky hours just to have bigger homes or the latest gadgets. How many families are living beyond their means? Their homes and crap are built upon shaking credit.

I came from a working class family. In my junior year, my school had a trip to France. I think my father would have a given up a kidney than tell me this trip was not in the budget. He was very bitter and angry about the whole thing. A simple we can't do it would have been fine. There would have been less hard feelings about the situation. I learned a lot about finances and the silly secrets.

The mortgage drama has been created, in my humble opinion, by people's failure to have a basic understanding of finances.
Budgeting and the concepts of borrowing money should be taught by schools by the eighth grade. If your folks won't talk about it the schools need to step in.