patrick.net

For years the interest rates have been super low. Many argue that we really didn't need them to be so for so long. But that's what they were. Effectively, the cost of money was super low. That sounds like a good thing. At least it should have been a good thing in my naive viewpoint.

But what do we have to show for this ? We as American society, what is that we have done over last few years that we can look back and be proud about. There is little disagreement about how we blew it on a political and fiscal level. But from a non-government angle, just as a capitalistic society, how do we fare ?

As individuals, we seemed to have completely botched the golden chance given to us. Many homeowners could have refinanced their debt to a super low fixed rate for next 30 years, reduced their monthly cash out flow and increased their equity - all in one shot. But rather they chose to gamble with even lower payments to risk higher payments just a few years down the road. They took cash out of their equity - not to invest or start a productive business - but to consume and now don't have much to show for it.

But what did the businesses do ? Did they use this opportunity wisely ? Have they invested the money that might bear fruits down the road. Some of the reports indicate that many companies in the SP500 index have much stronger balance sheets than what they had a few years ago. What role in it was played by cheap money ? Or was it more due to outsourcing and simply a general recovery after a recession 5-6 years ago ?

Or was this even an opportunity ? I think it was. But then do we have anything to show for it ? There has to be something good that came out of this. Or we collectively just simply blew it all away ? On all fronts ?

StuckInBA