Bust & Boom = Economics of Greed & Fear

August 25, 2007

HAVE YOU EVER WONDERED HOW A WORD, IDIOM OR PHRASE ORIGINATED IN THE AMERICAN LANGUAGE?

There has been a flood of articles and explanations about the current credit crunch, which is exacerbating the sub-prime loan debacle and also has escalated the decline in the residential real estate market.  If we take a moment to isolate on the real estate market, it is apparent that we are experiencing the classic “Boom & Bust” economic cycle.

As stated in a previous posting, the real estate market is cyclical in nature – values go up and values come down.  The key is to try to keep these cycles from germinating a recession or depression.  Once again, however, the steady and rapid rise of residential values over the last five years has fed investor expectations (greed) beyond the point of reason.

This current economic boom in residential real estate probably peaked in 2004-2005, but that did not stop further investment.  As a result, real estate values remained artificially high until fear stepped in, and the values dropped, as the speculators left the market for other opportunities.

In 2007 we are starting to see more clearly the consequences of not only the speculation in real estate, but also the speculation in the financial market by channeling huge amounts of funds into mortgage backed securities.  The investors believed the big lie and forgot the basic tenants of investing; now, we can only guess at the depth and breadth of the real estate bust.

The “Boom & Bust” economic cycle has been around for well over 100 years, and the fundamentals are essentially always the same; however, we never tire of being mesmerized in the morality play by the two primary actors – greed and fear.

Please read the attached pdf posting on the origin of “Boom & Bust” to see the full results of my research.  As always, I would appreciate your feedback on the attached pdf.

1) Did you find the posting informative?

2) How would you improve this posting?

3) Can you provide a better Moment of Zen?

Jim C Quiz – Boom and Bust.pdf 

Credit Crunch = A Black Hole of Rationing

August 17, 2007

HAVE YOU EVER WONDERED HOW A WORD, IDIOM OR PHRASE ORIGINATED IN THE AMERICAN LANGUAGE?

One very unique economic/financial event, a credit crunch, happens to be peaking in the month of August, 2007. We all are aware that the real estate market is cyclical in nature – values go up and values come down, but the general trend in America over the past several cycles has been positive.

The credit crunch or credit squeeze also appears to be cyclical in nature – credit standards relax, then they tighten. The definition from Encarta is as follows: “finance credit squeeze: a situation in which the amount of available credit in an economy is restricted and so slows down economic activity.”

Most experts state that the term credit squeeze originated in the early 1950s and it generally had a very narrow meaning to refer only to a reduction in the supply of credit. However, the phrase credit crunch originally involved the process known as disintermediation – a decline in savings-type deposits at banks and savings and loans that result in a decline in bank lending.

So what is so unique about the current credit crunch – is it really that much different from past economic cycles? A more encompassing view of a credit crunch is now based on any non-price constraint on bank lending, not just disintermediation. In addition, the securitization into mortgage backed bonds has allowed the investment risk to be spread globally.

Therefore, the meaning of credit crunch, just like other words and phrases, has evolved well beyond the early 1950 – 1960s interpretation.

Please read the attached pdf posting on the origin of credit crunch to see the full results of my research. As always, I would appreciate your feedback on the attached pdf.

1) Did you find the posting informative?

2) How would you improve this posting?

3) Can you provide a better Moment of Zen?

Jim C Quiz – Credit Crunch.pdf

Immunization = Preventive Medicine

August 12, 2007

HAVE YOU EVER WONDERED HOW A WORD, IDIOM OR PHRASE ORIGINATED IN THE AMERICAN LANGUAGE?

Last week, we were reminded that August is one month without a legal holiday; however, it is a month when most Americans take some time off from work for vacation. As we continue to focus on the month of August, I found interesting – August is National Immunization Awareness Month.

What is so unique about immunization? Haven’t we all had vaccinations for measles, mumps, rubella, polio, chickenpox, smallpox, etc. etc – like, we have been doing this forever – right?

Well, yes for several generations we have benefited from immunization, but no, not forever.

The first known immunization of any kind was for smallpox and that was done in Britain a few years before our American Revolution. Although a true physician led cowpox immunization program did not start until 1796, the process spread quickly, and has led to the almost total eradication of smallpox in modern human society. In fact, the success with smallpox became the driving force to find solutions for a variety of other illnesses.

The attached pdf posting focuses directly on the origin of the word, immune / immunity / immunization. Research shows that the term first related to medicine in 1879. Please read the attached pdf posting on the origin of immunization to see the full results of my research.

There is one additional very interesting aspect of immunization that has nothing to do with its origin. It has to do with the growing discussion and controversy; in fact, it is reflected in the following question: Is the current and required program of immunization for our children causing more harm than good?

Despite overwhelming past evidence that immunization has saved lives, we are starting to see more and more people begin to question the validity of immunization. Much more information is required on this topic, but maybe you should begin looking into this question for yourself.

As always, I would appreciate your feedback on the attached pdf.

1) Did you find the posting informative?

2) How would you improve this posting?

3) Can you provide a better Moment of Zen?

Jim C Quiz – Immunization.pdf

Holiday = A Time Away From Work

August 5, 2007

HAVE YOU EVER WONDERED HOW A WORD, IDIOM OR PHRASE ORIGINATED IN THE AMERICAN LANGUAGE?

The month of August is now upon us.  Despite the fact that August has no legal holidays, one of the biggest events of the month for the vast majority of Americans is taking a holiday (vacation) from work.  In researching the origin of the word holiday, it quickly became evident that the term related almost exclusively to religious events.

The term holiday is a merger of two words, “holy” + “day.” 

However, just as the two words were merged for convenience, the new joint word began to be used less and less to signify a religious event.  As early as the 16^th century, celebrations began to show up on the calendar not as “red letter” days (red letters were used in olden times to denote church festivals), but as secular events.

This is a very good example of how the meaning of a word or phrase can be changed over time.  We, the people, make the word or phrase adapt to the times.  Observe and adapt is an age old axiom, which applies just as well to our lexicon as to all living things. 

Slowly, but quite steadily, the definition of the term became to mean “a day for celebration when many people are allowed to stay away from work or school.”  In fact, in Canada and Britain the definition of holiday is synonymous with vacation.

Please read the attached pdf posting on the origin of holiday to see the results of my research.  Of course, I also hope this stimulates your own research, and I would appreciate your feedback.

1) Did you find the posting informative?

2) How would you improve this posting?

3) Can you provide a better Moment of Zen?

Jim C Quiz - Holiday.pdf