Pensees: The Banking Crisis

I agree with most of what he says. But it drives me crazy the way people use misleading stats. He states that 25% of subprime mortgages are delinquent. That is true, but we need to understand percentages in light of their base number, not in a vacuum.

Currently subprimes are less than 10% of all mortgages. The delinquency rate is 2.7% of all homes. That is only .6% higher than the historical delinquency average of 2.1%.

It’s the media’s use of misleading stats that is driving much of the histeria. The truth is that these bubbles burst every 3-5 years. We then pass regulations to ensure that this never happens again. Greedy man then figures out a new way to “game” the system. And 3-5 years later we have another bear market. It’s a cycle that has historically been repeated. This time it’s no different, except that it’s coming from a “new” direction.

Anyway, that’s what I’m telling my clients.

I might need to pull out my old copy of Larry Burkett’s book, THE COMING ECONOMIC EARTHQUAKE. If I recall correctly, he predicted these things to occur around 2005.

from my mom’s weekly e-mail—they are missionaries in Togo, West Africa:

“I hear stories from some of our teammates trying to raise support to come out here, discouraging stories. Churches in the US are cutting back on their missions giving because of a bad economy. It’s a mistake. A bad economy is a good opportunity to see God at work. In prosperous times it’s easy to miss much of God’s activity because we think we have ample funds to do things ourselves. But in lean times only God can provide, and churches that decide not to let God do that miss seeing Him do what He does best.”