Friday, September 19, 2008

Laws of Economics

With all this turmoil on Wall Street right now, I was remembering an editorial I cut out of the Wall Street Journal in June -

Vanishing Act: The Law of Household Economics
For every financial windfall, and equal, unexpected cost;
Tax Rebate = Appliance Repair

by Karen Blumenthal

"...Just as we prepare to get ahead, some undbudgeted expense explodes in front of us and we have to deal with it. The Law of Household Economics isn't so much about rotten luck as it is about the endless challenge of keeping our financial house in order. Staying on top of the budget, keeping the credit cards in check, and building those savings adn retirement accounts takes real discipline and hard work. Windfalls won't get us there. Instead we have to sweat the spending details, worry about investment returns and, in times like these, cut back or even scrimp....I clearly remember our last rebate. We had high hopes for our expected $500. But a week before it arrived, the air conditioning went out. The bill to repair it? $500."

I can't help thinking this same law of economics is coming home to Wall Street.
And those financial wizards never saw it coming.

1 comment:

Jenn @ Juggling Life said...

You would have thought that someone would've cottoned onto the idea that those mortgages weren't ever going to get repaid a long time ago.