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The Gunslinger said, "My advice to you is to get yourself a Holy Book, then learn how to pray."
The Preacherman said, "My advice to you is to get yourself a gun, then learn how to shoot."
The Politician said, "My advice to you is to get yourself free of superstitions and weapons, then learn how to trust in me."
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Thursday, August 7, 2008

Dumb Luck Investing Update

Now that we are used to the idea of sub-prime mortgages failing, we get news that a substantial number of PRIME mortgages are also defaulting. When the A+ moneymakers can’t pay their tabs, it makes me wonder if things may be more calamitous than we realize.

We all know the words to these subsequent sad songs of recession. People are losing their jobs. People are losing their homes. People have record debt. People are losing credit worthiness and the ability to qualify for loans. People have negative savings, and many have negative net worth. People have raided their retirement savings, some to the point of ruin. People cannot afford healthcare or health insurance. People who have children, especially those that are sole providers, need divine intervention in order to survive.

We cannot eat our own flesh to provide nourishment. The availability of credit via low interest rates has usually been the stimulus for our economic booms; available cash rarely spawns an economic recovery simply because cash is rarely available. Currently, interest rates are not historically very high but lenders are only willing to make loans to sterling customers, i.e. people who really don’t need the freaking money in the first place. That leaves most people to stack more debt, usually just for essentials, onto their high interest credit cards, which further erodes their credit worthiness, and further erodes their ability to spend because of the juice they are paying on the card debts. Loan sharks are running and ruining our lives.

This sluggish economy may just hang around for years like an unemployed relative. Don’t be surprised if you find yourself needing to adjust to an even lower standard of living.

Wishing the very best of dumb luck to us all, it looks like we are certainly going to need it.


James A. Zachary Jr.


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