NEW YORK (Reuters) - Renowned investor George Soros said on Friday the world financial system has effectively disintegrated, adding that there is yet no prospect of a near-term resolution to the crisis.
As I had mentioned in earlier blogs, very few economists are willing to say that we are out of the woods and still fewer are willing to say we will see the light at the end of the tunnel by the end of the year. I have also read of individuals who have said that it will get a lot worse. George Soros is one of those individuals.
Our entire financial system is being stressed and I honestly believe that we are far from seeing a positive change. After giving a lot of thought to this, I have a theory. I'm not an economist or a financial guru like Soros; however, I have my own theory about the collapse.
It started as a perfect storm. The first problem was the building boom. Everybody was getting into the house and real estate business. You had programs on all of the channels showing you how to flip houses and people went crazy. They saw a perfect opportunity to buy houses, fix them up and then dump them for a profit. Buyers could get financed just by fogging a mirror. Everything was sweet. At least, we thought things were sweet. As long as everyone could make their bills and pay their mortgages, things would work. Plus, there were so many different finance options for people to make minimum or below minimum mortgage payments.
The second problem, the price of fuel and its impact to food and the rest of the economy, pushed everyone over the edge. When people are faced with buying food or going to the doctor, they are going to skip the mortgage payment for that month. Americans were already having difficulties making their mortgage and credit card payments. Now, the price of gas and then food went up almost overnight. People were now pushed over the edge. People started cutting back on buying televisions, computers, etc. When you have to buy gas or food and try to make a mortgage payment, buying a computer or television just isn't going to be in the cards. For example, I watched a box of instant oatmeal at Wal-Mart go from $1.50 a box to $1.84 a box. Even though the price of fuel has dropped, the new price of $1.84 remains unchanged.
Now, you see the perfect storm and how it started. Once people cut back on buying luxury items, then they start working on budget and start cutting back on eating out. I have seen a lot of restaurants in Cedar Park, TX closing their doors. For example, the Village Inn restaurants in my areas are now closed. As people cut back, the companies that manufacture computers and televisions start laying off people. Look at companies like Dell, Panasonic, etc. They are laying off people by the thousands.
This is where I come into the storm. Like a tornado or hurricane, my life was impacted. I, too, joined the ranks of the millions of people who are unemployed. During an average week, I submit 15 resumes. In order to stretch my budget, I had to find cheaper health care for my family. We have had to cut back on luxury items. I worked for a high-tech company for 8.5 years and was shown the door on December 5, 2008.
My manager tried to help me locate a job inside the company. However, when no one is hiring and waiting until the first fiscal quarter before considering headcount, it is very difficult to find something. I was given until the Friday morning at 11AM to find something. At 10:30AM, I received a phone call. No one could help. So, a skilled and highly experienced individual with 20 years of supervisory experience, 16 years of program and project management experience and 8 years of vendor contract and relationship management experience was moved from his cube to the curb.
As I had mentioned in my other blog, www.capableofmore.com, millions of good people are now facing all of the problems of being unemployed. I am one of those individuals. Am I bitter? No. Am I disappointed? A little. Am I hopeful? Yes. If I am going to make it through this, I have to remain hopeful. To those who are reading this and are unemployed, keep the faith and remain hopeful.
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