Don't Panic!!

It's been a rough week on the financial markets of the world, hasn't it?

I still remember the day known as Black Wednesday, 16 September 1992, when the financial markets in the UK last went into so severe a financial meltdown. Speculating on sterling, following the decision to enter the European Exchange Rate Mechanism (ERM), led to a run on the pound and increases that led, by the end of the day, to Bank of England lending rate of 15.5% by the end of the day.

You can read the gory details at http://en.wikipedia.org/wiki/Black_Wednesday

It also led to a collapse in the housing market - just as we had spent a year in our new house. It took another seven years before, when we moved to our current home, we could even get back the modest price we paid for our house.

Over the last couple of weeks, we've seen a similar adjustment take place as a result of the "sub-prime" mortgage problems a year ago. This time the hit has been taken by the major banks - two going down and out, the big mortgage lenders in the US and a major insurance company bailed out by the Federal Reserve, and talks of bank mergers in the UK to weather the storm.

The temptation is going to be there to panic, but there is one thing I have learned of over the years when it comes to things like mortgages and savings - take only the risks you can afford
and watch what you are doing.

I know there are people who have gambled and lost all - I feel their pain, as I've been in insufferable debt myself with no apparent way out. Do not judge them, but help them if you can. As for those who allowed such a thing to even take place - be careful what you grow, because you always have to clear the refuse away afterwards.