With the collapse of Lehman, after the bailout of Sterns, the takeover of Fannie and Freddie, and now the pending purchase of Merrill Lynch, the world of finance is in great disarray. The scene changes rapidly... too much so.
So imagine that you're Joe and Jane Babyboomer, who have trusted in the solidity of these institutions for years: where do you now feel safe putting your money? Especially when Greenspan himself says, "We will see other major financial firms fail." I think we're reaching a tipping point.
Let's stick to what's true:
In my opinion... we'll see more people shifting jobs, living paycheck-to-paycheck, trying to find new ways to make money, tightening the budget (read: recession) due to uncertainty about what's going on, and increasing institutional mistrust.
- People always need loans.
- People will always seek to have their money work for them through investment.
- People want a measure of control in the stewardship of their finances - they seldom want to just hand over those reins.
This is the time for the disruptive innovators to step forward. It's time for real entrepreneurship, to create jobs and initiate alternatives. Because the big institutions today fear the risk out there, it won't come from them - it will come from the fringe, as disruptions always do.
A vacuum in the market always pulls in new players. In these viral times, it will come more quickly than the institutions will want to think possible.