2008  prove to be a very interesting year thus far for the US Economy. Wall Street was brought to its knees this year as the US Financial system almost broke down. Earlier this year when Bear Sterns fell we had no idea that this was going to be the beginning of the end for the prestigious Wall Street Banks, but Main Street Banks were not immune to this crisis either.

The Markets were also at an all time high until consumers started defaulting on their Mortgages and it all came crumbling down or so the financial experts say. Investments banks had bets on Mortgages really bad Mortgages and boy it they all fall down. JP Morgan Chase quickly took over Bear Sterns with the help of the Government. Indy Mac Bank was closed by the FDIC. We watched as long lines stood outside the doors trying to find out how they could retrieve what could be their life savings. As I watched this terrifying scene played out on my television set I though to myself how could the bank allow such a thing to happen, how could they allow the approval of loans that most of these people could not afford. Some blame lack of regulation or lack of common sense but we blame it on greed. The Banks want to maximize profit so bad, the brokers who put through the deal want to make a quick buck so bad and in most cases the consumer who just bought the home hoping the price of the home would go up so they could sell it at a higher price (Flip). Some even blamed the government for the lack of regulation

As the year went by we saw Lehman Brothers Bank failed, apparently no one rescued them, Merrill Lynch was acquired by Bank Of America. A lot of people lost a lot of money with Lehman Brothers going down many went from riches to rags, and the jobless rates climbed. Banks virtually stopped lending money to clients which prompted congress to approve a stimulus package of $700 Billion dollars to inject into bank holding companies and stimulate the economy. We have never seen treasury secretary Henry Paulson so often, he was on TV everyday trying to get things in order. Goldman Sachs and Morgan Stanley which were the last standing traditional investment banks became holding companies so they could get a piece of the $700 Billion dollars.

The most interesting showdown was between Wells Fargo and Citigroup over troubled bank Wachovia. It was first announced that Wachovia was to be taken over by Citigroup but then Well Fargo came in the last minute and took Wachovia from citigroup. Citigroup was cash strapped, Wachovia had $400 billion in deposits which would help a ailing Citigroup which was at the time taking a pounding in its stock price. It went from the fifty dollar rage a year ago to a low of the $ 3 range.

For Joe six pack who does not understand what all this means what do we do if all the banks are going down and now one really knows what to do. Should we take all our money out of the banks and leave it in our basements.