When sub-prime met prime time

Writing on the financial meltdown issue is kinda overkill I'm sure. There's been more than enough air time given and I guess the average Joe has had an overdose. A familiar story line plays out with a few name changes: Merill Lynch, Lehman Brothers, WaMu to new record lows that are reached with the sound of each day's closing bell on Wall Street or Dalal Street.

I don't want to dwell on the failings of executives. Whether it was greed, undue pressure from their boards to deliver better than expected results quarter after quarter, short sightedness or just plain incompetence, it really doesn't matter anymore. Have the lessons been learned? We certainly hope so.

We've also flogged another horse enough- governments and (de) regulators. Will the bail outs and rescue plans help retrieve the situation? They most likely won't take full effect in the short term and in my tuppence opinion, will probably come up short.

I do not underestimate the impact that they have had in the slightest, for they are accountable to a fair extent for the situation that we are in. What I want to explore is a more fundamental reason for this crisis-

our XXL dreams

... and our urge to fund them with money that we don't have.

It was the common man, who succumbed to his impulse to purchase a home larger than he could afford. And I dare add, larger than he needed. Whether the odd person was lulled into a mis-sale or not, at a macro level I believe most people knew what they were getting into. And it didn't stop at homes alone. EMIs are the name of the game today and its the magic wand for anything from I-Pods to a posh set of wheels.

At some stage in life, we forgot the value of fiscal discipline that I'm sure most of our parents generation practised through out their life. We failed to differenciate between a need and a want, a necessity and luxury. There's no doubt now whether this is a temporary slump or the start of a painful economic recession which has unfortunately had a domino effect on otherwise fundamentally strong economies around the world.

What happened to saving for a rainy day, to being content with what you have, to borrowing sensibly with the knowledge of what you can afford to pay back. Not all of us are financial gurus, but all of us have the capacity for common sense and prudence. Hopefully we have learned our lessons. And after fair criticism of the people who were entrusted to keep things in check, lets take a healthy dose of introspection as people who've had a hand in this as well and move on wiser.

My heart goes out to those who did practise this, and did save for a rainy day. For those who invested as they should have, in good equity for the long term. They are paying for mistakes that they never made.