You may have heard recently about some hubbub with the economy and stocks and stuff. Recently, Warren “Jimmy” Buffett called the current crisis an “economic Pearl Harbor.” While this may not make sense to some of our readers, we are here to explain.
Let’s use Buffett’s analogy.
It’s the morning of December 7, 1941. The U.S., still reeling from the Great Depression, has not entered World War II, thanks mostly to isolationist policies. In come Japanese fighter and torpedo planes. Suddenly the U.S. is caught off guard and war begins a new era of the 20th century.
But first we need to back up. Let’s say the U.S. credit and loan debt is the Japanese Empire. For years prior to the war, the U.S. debt was building up its forces, offering really good deals and raping Nanking. We knew about it but chose to turn a blind eye to it, hoping the problem would resolve itself.
Hit the jump for the sneak attack.
We were too busy buying homes and things we didn’t need, which we will say is the U.S. Naval and Army Air Forces stationed at Pearl Harbor, Hawaii. Our homes and banks, the smaller and larger ships respectively, were all stacked neatly in a row, this way, we could see our neighbors better and also, it was thought that it would keep our homes safe from Japanese saboteurs. We also believed that because we were in Pearl Harbor (America), the water was too shallow for torpedoes to get us. We were wrong.
One morning, we sleepily woke up to find that we were being attacked. In the first wave of attacks, the housing bubble, like a torpedo aimed at the USS Arizona, blew up. Fannie Mae and Freddie Mac, two of the largest lenders in the country, announced they were taking on water (negative revenues) and were going under. Suddenly, we found ourselves unable to make payments on our mortgages, loans and credit card bills because we had figured we would never have to worry about them or their advanced airplanes.
These Japanese planes (debt) came in one morning and hit the biggest ships (banks) in our Pacific Fleet, and banks like Washington Mutual soon capsized like the USS Oklahoma. Let us not forget that amidst all of the explosions and bullet fire from strafing debt planes, our servicemen (jobs) were dying. Thousands of jobs were killed in the vicious attack.
By the time it was all over, we knew we were at war. President Franklin Delano Roosevelt asked Congress to declare war (bail out banks) in his famous speech, “September 15, 2008, a date which will live in infamy.”
It remains to be seen who the Nazis are in this one, but we are sure to find out.