How did the economy get into this mess? Could Cash Advances help?

Bear Sterns

Federal Reserve Bank of New York Building

Would cash advances help the U.S?  It all started with Bear Sterns perched on the threshold of bankruptcy. That was back in the last week of August and the beginning of September 2008. Bear Sterns needed to do something and do it fast or the doors would not open for trading again. Bear Sterns needed help in the way of a loan and what a loan it would be. They needed help in the neighborhood of some 600 million dollars, but whom could the Wall Street super giant turn to for that much money?

Can I speak to Mr. Bernecke

A call was placed to the Federal Reserve Bank and Mr. Ben Bernecke, in particular, to inform him of the situation that was unfolding. After listening to what the inevitable outcome would be, Mr. Bernecke decided that the only way the Federal Reserve Bank would be able to help would be to offer the loan through a third party that would be charged with overseeing that the funds were administered properly.

I’d like you to meet J P Morgan

In comes J P Morgan. They would take the loan/cash advances and eventually total control of the now defunct Bear Sterns. This was the start of the end. It was going to take less than a week for the housing market to come to a screeching halt as the banks caught wind of what was happening with Wall Street and the Federal Reserve Bank. The nine major lending institutes froze up and stopped lending money. They wouldn’t even lend funds to the most stable and lucrative companies. All those haphazard home buyers were now left wondering, “How am I going to pay my mortgage?”

Enter Mr. Paulson, Secretary of the Treasury

Less than a week later, word comes that the two largest mortgage lenders in the world were poised on the edge of total and complete meltdown if they did not receive help from the Federal government. Armed with this new information Mr. Bernecke placed a desperate phone call to Hank Paulson, Secretary of the U.S. Treasury. After a very lengthy conversation, Mr. Paulson tells Mr. Bernecke that there is no way the Federal Government can step in and bail out both lending institutions, but he has an idea as to just how he can get around this disaster.

Next comes Capitol Hill

Hank Paulson calls on Capitol Hill and proposes a modified bailout. The bill was shot down and the market was allowed to start to crash and crash it did. The stock market lost more than 2000 points in one day’s trading.

The first stimulus package

Armed with the knowledge and experience of being one of the world’s first and foremost financial experts, Hank Paulson devised a plan that would allow Fannie Mae and Freddie Mac to get the Federal funds that were desperately needed to ward off the greatest disaster since the Stock Market crash of 1929.

The plan detailed that the Federal Government would take eighty percent control of the total stock of both companies, thus putting the Federal Government in the business of home mortgaging and the responsibility of all the loans and cash advances that were not being satisfied. Then comes the first stimulus package-a total disaster right from the start. The funds were turned over to the people that got us into this mess to start with and how did they spend it?

In steps Obama

The election was looming on the horizon and the country was in need of change and the only change that could be fostered was to elect a new regime. The Democratic Party was needed on Capitol Hill. We all saw just how the present Chief ran things. All we can hope for now is that the newly elected President will be able to accomplish what he has stated he would.

Let’s give him our support and tax dollars so we can have our vehicles at the same price and outsource our work to foreign lands for cheaper wages.  While they are not a long-term solution to larger financial issues, cash advances can be the right tool for your budget in case you find yourself in a fix.