By: Douglas J Utberg

The recent financial turmoil in the global economy has caused many people to adopt a dour perspective on the state of financial responsibility in the nation, and across the world.  Much of this cynicism is certainly well deserved, as there were many governments enforcing irresponsible regulations, banks making irresponsible loans, and people taking on an irresponsible amount of debt.

However, it is important to avoid overlooking the fact that there are many people who have remained very fiscally responsible throughout all of this financial silliness that has erupted recently.  The dynamics of the current credit markets are such that risk tolerance has almost completely disappeared, creating a ‘flight to quality’ that has drastically increased the demand for guaranteed treasury notes.  This increase in demand has significantly reduced the interest rate for mortgages that are tied to these treasury notes . . . but only for the people that qualify for loans under the current (more stringent) standards.

Thus, in a strange turn of events there is a ‘responsibility dividend’ that is available to people who have managed their finances prudently.  Since the market appetite for risk has evaporated, there are tremendous opportunities available for low-risk borrowers to make intelligent investments.  This is because the financial crisis has pushed most of the high-risk investors out of the market since they can no longer get capital from lenders that are very timid about taking risk in the current economic environment.

The result of the current situation is that investors who have remained responsible over the past few years will have a brief window of opportunity to make lucrative investments with very minimal competition.  This will result in many fortunes being made over the coming years, just as new fortunes are always created from economic recovery.  Each of us must ask ourselves whether we will be one of the people who create a new fortune.