In the markets in the last few years they have had their high times and low times. One of the questions we have to ask ourselves is "if we have learn anything from our past?". I believe we keep making the same mistakes as we made in the past. Lets just take a quick look at the 1929 great depression and the today 2008 credit crash.

The 1929 market crisis started in the year 1920, in the 1920's everybody was making money in the stock market it was said that no one could loose. But in a capitalist society for every winner there are a number of losers, that is called free enterprise. At this time the stock exchanges were not as regulated as they are today, as we thought.

Now lets take a good look at the root of the problem, in 1920 General Motors stock were at $2.00 a share. By 1929 General Motors stocks were at $500.00 a share, Now if we go to the primary formula for capitalism, for every winner there has to be number of losers. Capitalism does not allow winners only there is a price to be paid in the future. Lets give an example of the stock crash of 1929, most of the people who owned stock in the stock market owed lots of money so in reality they didn't own the stock the banks did. But the problem is there was lots of fraud, such as the get rich scheme, if you invest just $15.00 a month in the stock exchange you can get $80,000 over 20 years. Well people were even mortgaging there homes to put together enough money to get in on the action, the problem was that the stocks prices were becoming inflated. Yes, everyone was making money but the other problem was that it was just paper and not real money. It was speculation, banks were investing in paper, where the market is driven by greed and speculation is just another form of legalized gambling.

Now when the market started to show signs of instability, people started to panic. The problem was not only people panicking it was also financial institutions that were panicking now. They also had debts with other financial institutions, which caused a panic throughout Wall Street. The stocks started trying to be unloaded at any costs, now lets take a good look at the real winners, they were certain groups of individuals or families that had the cash flow and this was usually old money. That will be another story. These groups of individuals or families would have made money throughout that time period but the only difference is that none of there capital was just paper, they didn't have to worry about credit or money problems, they were their in the beginning and were there in the end. The majority of these groups of individuals or families were the original owners of the stock when this all began. Some of these individuals or families were the founding members of some these companies like Henry Ford, they already owned most of the controlling interests of the company. This was just another way to make more money, in there eyes they didn't really care how much the company was worth in the end they were making money no matter what. Most of the companies values were in their land holdings and factories. That was what everyone forgot was that the stock is based on speculative growth and not the actual cost and values. So when people started selling there stock, these certain groups of individual or families just sat on the sidelines and waited for the stocks to bottom out. So now lets ask the question who made all the money? That's another story.

Now in the 2008 credit crisis it is very similar, but in this case the stock market and financial institutions were not only effected, the real estate market was effect too. Now lets go back to 1994 - 2008, during these years we had a lot of very high points because of Y2K tech industry. This industry brought in a whole new set of problems, we had a high demand for highly skilled individuals. In the process of training and hiring these skilled individuals there was more money being offered to employees to change companies. This became a financially inflated economy, some financial analyst tried to warn us of the problems if the markets decided to collapse. Now when this Y2K started back in 1994 and companies were trying to catch up with all this Y2K compliance issues. The big issues was that employees were getting big salaries in order for companies to be able to get this done.

The other major problem was that companies always look at their bottom line sooner or later. When this happens, companies start looking at ways to start cutting costs in order to increase their bottom line. Now that does not change the fact that it will still cost the same, this does not substantiate the rise in costs. You might see inflation increases certain sectors but not in all sectors of manufacturing and farming. In allot of cases the costs are extremely lower than the cost 5 years ago. This is mainly because of free trade and the global economy which allows work to be outsourced to other countries where labor is cheap. That is not the main reason for the global meltdown. In the real estate market, the demand start out weighing the supply, so because the interest were so low and it was easier to get a mortgage the prices for properties started rising.  

The main reason was mortgages, companies were selling mortgages at extremely low interest rates. They were selling mortgages to people who didn't even qualify, even individuals who were retiring and had no mortgages. Then someone came up with the idea of selling the mortgages to wall street and this was how hedge funds began, hedge funds are basically companies who speculate on the mortgage market. The biggest issue with this is that most customers didn't know that they would be paying higher interest rates in the near future. That was the way the mortgage agreements were sold. Allot of the individuals were hustle into taking mortgage out and did not understand that they would be paying extremely high interest rates. Now this took place over the last 10 to 15 years, and has just started catching up.

It wasn't only hedge funds who were involved in the mortgage crisis, it was also banks like Fanny Mae. These major institution were blind sided by the fact that it was thought of easy money, They didn't take in account that the market would drop and people would loose there jobs. When this happened there were individuals who could not make the payments especially when 5 years to 10 years later depending on the contracts. They would be paying an higher interest rate that individuals could not effort, especially if the market made a down turn. So there was high amount of foreclosures because individuals could not afford to make the high mortgage payments.

Now when companies and individuals can not afford to make the payments, then the financial institutions will loose. This also drove down the real estate market which meant all around everyone will loose other than the individuals who started it. They were all paid high commissions for this and nothing can be done to bring them to justice because this is called business. This was a legal way to steal other individual's money, the other thing was on every transaction there was the following individual involved:

1. Real Estate Broker (5 % commission)

2. Lawyer ($1000.00)

3. Mortgage Broker ($2500.00)

4. Bank (5 % interest)

5. Property Appraisers ($2500.00)

6. Property inspection ($1000.00)

Each of these companies or individuals are being paid to give there expertise to you before you buy the property. If you pay these individuals to give you there market evaluation of the property. Now if they miss inform you and your property values are not what they reported it to be. The hitch is, they do not have to take responsibility for their action. That is wrong each of these companies or individuals should be held accountable for their part they played in this. We are paying large sums of money to individuals who do not care about anything other than making the transaction at any cost. I give you an example in our own country Canada which didn't get hit as hard as some other countries, it is happening, some properties were over appraised by 80 %, if you pay an individual (Seller) for a business or property and the individual (Buyer) is told by his so call expert that the property is worth $155,000.00. A year later the property is worth $30,000.00, there is something wrong with this picture.

The problem is that they call this business and it is no different than someone trying to rob you, If that is against the law then why is this not. If you pay these individuals to do appraisals, give legal advice and etc. Then they are being classified as being an expert and if that is the case then they should be held accountable for it. But that is not the case, they produce allot paper that does not mean anything. So what ever they put in writing, is really written diarrhea, but you are force to get these experts as part of securing a mortgage.

It is no different than insurances, let's give an example here, the insurance companies have a monopoly on this business. One of the major problems was that people or individuals are being force to pay insurance on properties, if you are being force to take insurance, the insurance company should be held liable to look after the damages on your property such as damages to roofs and property damage if cause by your neighbors property. That is not the case, they instead, try to force you to look after the problem. We have a major issue in today society, not being able to hold companies or individual responsible for their misrepresentation and wrong doings.

When you add all the cost and our unemployment and shrinking wages, no wonder the economy is in a bad state. We all understand economics, it is very simple, what is the replacement costs to replace that building. If it costs $100,000.00 to replace the building, then it cost a $100,000.00. This would include labor costs and materials.

In today's world we have let greed take hold of our very existence, lets give an example here. Lets just take a good look at charities as an example. There are businesses out there that build there whole business around selling services or products to charities. Isn't this something and we talk about corruption in the countries that receive the charity. This is just a legal form of corruption. We all understand business, that if you are sending food to help starving people the food needs to be paid for, the shipments need to be paid for, that is fine. Do we need to sell ribbons or do need to supply products to encourage people to donate. No, these are charities not businesses, they are there to help the less fortunate. But Wall Street and the business world has figured out how to make a businesses out of parts of these organizations. 

Now with all this economic turmoil going on, the government is throwing tons of money at the very institutions that caused the problem. In allot of cases the victims are the people already paying for it through taxes, if the government is giving hundreds of millions of dollars to wall street. Then they are the ones that are going to benefit, these are the very individuals who are responsible for the mess.

Let's sum it up as we are a society that lives on credit. When the credit dries up there is no more money or credit. Someone has pay for this in the future, and this will be future generations. The only way to solve this is to stop trying to make a global economy and start looking after our own economy, no one else will. This might mean us going back to basics like dealing with actual costs and not speculative cost, if it cost $200,000.00 to build a house then it costs $200,000.00 to buy a house. If you take in account the age, wear and tear on the house over the years, there will be always a guide line on the actual cost for the house and property.