King Solomon said there is nothing new under the sun. Our current financial crisis was caused by runaway mortgage lending, combined with government meddling with interest rates and loan terms resulted in a credit crunch and an eventual collapse in real estate prices. This in turn has caused cascading financial problems throughout the land.
But look at what occurred in Rome almost 2,000 years ago....
"Well, by reading Tacitus, for one thing. In Book VI of The Annals, Tacitus describes how runaway mortgage lending, combined with government meddling with interest rates and loan terms resulted in a credit crunch and an eventual collapse in real estate prices. All of this happened in A.D. 32 during the reign of the Roman Emperor Tiberius."
As I said when this all began, having real estate prices in a steep decline is a whole new ball game and will have a much greater effect on the financial system than say the collapse of a particular corporation or maybe even a particular industry. This is because our system is built on stable to rising real estate prices. This is likely true of most all economic systems.
But isn't it interesting that they went through essentially the same thing in Rome? And notice what the government finally decided to do about it.
"The destruction of private wealth precipitated the fall of rank and reputation, till at last the emperor interposed his aid by distributing throughout the banks a hundred million sesterces, and allowing freedom to borrow without interest for three years, provided the borrower gave security to the State in land to double the amount. Credit was thus restored, and gradually private lenders were found. The purchase too of estates was not carried out according to the letter of the Senate's decree, rigour at the outset, as usual with such matters, becoming negligence in the end. "
We shall see if our government is able to throw enough money at the problem to prevent even further pain in the short term or whether this situation we are in will only be finally solved by the passage of time.... perhaps a couple of years or more.
RWG
This is a brilliant historical comparison.
"Those who cannot remember the past are condemned to repeat it." (George Santayana, The Life of Reason, Volume 1, 1905.)
Of course, our guvment edikashun does not teach history!
Posted by: M. Fearghail | December 05, 2008 at 08:26 PM