I believe there is a “pendulum effect” in so many areas of our world. Some may call it “a lemming effect”, but pendulum sounds so much better. Let’s consider “pendulum effects”:
Think about the Pendulum Effect in today’s ability to finance a home. It seems as though it was just a couple years ago when anyone could get a loan for a piece of real estate – or a home. In fact they called them “liar loans” (all you had to do is apply for a loan, lie about your financials, income, etc. and a loan was given). That is part of the center of the financial collapse in 2008. Today can hardly get a loan from a bank. They are scared to death to make loans – thus the pendulum swings from one side to the other.
That weaves the Pendulum Effect in the Banking Policies and Regulation. Our government has had a bias to encourage people toward home ownership. The Community Reinvestment Act of 1974 essentially forced banks to lend money to people who are not good credit risks, and who may not have the self-control or be responsible to be home owners / borrowers. Yet if banks did not make loans to these people, they could have their ability to be in business (their charter) taken away from them. Now that we have seen the wisdom of this regulation, we have new regulations that limit the amount a bank can have in real estate mortgages.
Consider the Pendulum Effect in the area of energy exploration. There is a great deal of rhetoric said by our politicians (all parties) about the need and their plan to become “energy independent” (or less energy dependent upon countries who do not really like us). So that ambitious plan, which is the mission statement of the Department of Energy (founded in 1974, with a $ billion budget), yet we have no real plan, certainly have made progress that only pleases Arab countries. Yet with the advent of directional drilling technology, we now are able to draw much more oil and gas out of the existing reserves. That means today, we are able to be more energy independent thanks to American technology. Now if government regulators only allow us to draw on our resources.
Don’t let the Pendulum Effect impact your personal and investment decisions.
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Two things should matter to retirees and near-retirees: income from investments, businesses, or social security, and how far that income goes to purchase goods and services. Taken in tandem, these elements will define the success of your retirement, offering you freedoms and flexibility in your later years or requiring you to return to work to increase your income. Steve Booren Steve […]