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If you'd like to see somebody go to jail for helping create the global financial crisis, then $8million looks cheap.
That's the budget for the financial crisis inquiry commission. If, just for starters, some of the folks, responsible for the massive fraud at two of Washington Mutual's California offices went to jail, I'd think the money well spent.
According to internal Washington Mutual; documents, the fraud rate for mortgages from those two offices was 58% and 83%. No internal documents have turned up to show that the company ever addressed the problem.
But for investors constantly looking over their shoulders to see when the next bubble is going to pop and devastate their portfolios, that $8 million is a waste of money.
And that's because the investigation is looking in the wrong places for an explanation of the second bubble to hit financial markets in less than a decade.
The investigation will uncover:
- Greed. It's always with us.
- Arrogance. Wall Street breeds it. Masters of the universe, indeed.
- Bad judgment.
- Corruption. Pay offs. Lies of omission and commission.
Need I go on? But this cavalcade of human sins wouldn't have been enough without one essential ingredient - something that would magnify greed, arrogance, bad judgment, corruption, wishful thinking and more until they were powerful enough to just about take down the global financial system.
Identifying that ingredient and watching it at work now tells us that:
- We haven't seen the last bubble in our lifetime.
- We've done just about nothing to make sure that a bubble and its bursting aren't in our relatively near future.
What's that ingredient? Cheap money.
And it's still at work in the global economy right now.
The world is still awash in cheap money. Unlike the run-up to the mortgage debacle, this time the money is in the hands of national governments-China's foreign-currency reserves hit $2.4 trillion last month.
Jubak,Jim,MSNMoney,http://articles.moneycentral.msn.com/Investing/JubaksJournal/The-Key-Ingredient-Of-Market-bubble-aspx?04/15/2010
©OSB Financial Services, INC. rights reserves. Information has been obtained form sources believed to be reliable, but its accuracy and completeness and the options based thereon, are not guaranteed. Always consult your a financial adviser and prospectus before making an investment
©2010, Kelly Ruggles Web site
Kelly C. Ruggles is a fee-based financial planner located in Spokane.
Kelly C. Ruggles, President of American Reliance Group, Inc., a registered investment advisor.
Kelly Ruggles is the author of "The Financial Playbook" for Retirement
Kelly C. Ruggles does not intend to provide personalized investment advice through this publication and does not represent the strategies or services discussed are suitable for any investor. Investors should consult with their financial advisors prior to making any investment decisions
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