One word that sums up 2008….. PONZI.

Today the last date of the year, was reminiscing over and trying to come up with one word that defines and kinda sums up the eventful 2008.

After quite a bit of contemplation the only word that stood out was PONZI. The reasoning behind it is as follow

1) The mortgage giant called Country Wide with its no paper required mortgaging, zero down payment – mortgage scheme laid the ground work for mortgage crisis as we see it today. This scheme was targeted specifically at lower middle class and on boarder line poverty ridden consumers. These consumers were basically duped into buy homes under ARM( adjustable rate mortgages) and they never in their wildest dreams imagined the housing sector to collapse inwards in a downward spiral effecting every means of living. This was the very first PONZI scheme. Where in a few made money off of hard working Americans in the name of fulfilling the “American Dream” of owning a home
a) For the above said to take place the very core of the mortgage crisis was “own a house” philosophy of our President Bush. Though the premise of this was make the American dream more affordable never was this thought through. This lead to the above said.
b) With Country Wide going bust and the ARMs adjusting for major chunk of the population there was a growing number of Americans who saw their home value depreciating. Suddenly a monthly mortgage that was $2500/- per month jumped to $4500/- a month ( due to ARM) and to top it all, the over all value of the house started falling drastically. Hence if you had a $400k house mortgaged at $2500 a month the new equation took a reversal to $4000/- a month for $350K( and lowering in value every passing day) for the very same house.
c) For most of us in American living on credit is living the American dream (I included). For those who own a house – this is the biggest investment after car (well for most of us). Suddenly with the house not being worth what it was – your equity just got lower and your debt ratio increased affecting your credit score – now this is where the rest of the world takes its dive! With fewer dollars to spend and credit scores lowering people could not spend as they had lived for the better part of the last three decades. When Americans spend less the world economics went haywire. Not only did they notice but they just could avoid the ill effects of it.
d)The mortgage crisis took with it Freddie Mac, Fanny May, WaMu Bank, Lehman Brothers, Merrill Lynch and Wachovia Bank to name a few high players.

2) The other record setting event for 2008 was price of oil, we saw prizes sky rocketing to > $140 a barrel all in the name of speculation – and today it is less than $34 a barrel this I believe was the biggest PONZI schemes of all.

3) There is no short supply of PONZI’s in 2008, Mr. Rod Blagojevich the governor of IL pawned the very seat that Mr. Barack Obama vacated – some guts I would say especially when he knew he was under FBI radar.

4) The biggest of all was Mr. Bernard Madoff – ran a PONZI scheme that busted big time. It literally had the very rich looking for air to breath. This scheme had investments by the super rich in the country looking for quick cash. The way I look at it is – we do need a Madoff to make the very rich realize what a common man feels like to be thrown out of house that he has been paying for and leading to foreclosure. Forces me to think if that was KARMA.

I am open to your thoughts feel free to add in adjectives / words you things sums up 2008.

Note: I am not saying 2008 was completely rotten. We got to live through and experience the historical American elections which had its many firsts – record turn out for election, first woman in race, first black in race and ultimately leading to first African-American President of USA. But again the year had been so very depressing that one feels almost a sense of grief and dismay at the heaving task(s) for the next president.

_ Common Joe.