Yesterday we reached a true financial crisis in this country, brought about largely by the mortgage mess (and deregulation), exacerbated by this administration's tax cuts for the wealthy, and finished off by years of overconsumption and lack of common sense by many Americans.
For the government's part, in exchange for bailing out financial institutions who lent money to people they knew couldn't pay it back, they need to put into action some very strong regulations, and make sure they are enforced so this never happens again. It would be great if we could trust our mortgage bankers to not write loans they know are likely to fail; but when they work on a commission or bonus basis, unfortunately they have just not been doing that. That, along with mortgage plans that should never have come into being, such as 100% or even 110% mortgages, no money down, interest only, balloon payment and other exotic loans, caused this horrible mess. The bankers should never have written them, but consumers should never have taken them out in the first place. If the bank tells you you can afford a $300,000 house, don't buy a $300,000 house! Buy a $200,000 house. Trust me, the bank will allow you to send them as much money as you currently have and as much money as you will ever have in the future, given the chance.
Re the tax cuts that went largely to the wealthy - yeah, that worked well, didn't it?? What Republicans never seem to get is that "trickle down" economics doesn't work. Their philosophy is to give all the money to the wealthy and it will somehow trickle down to the little guy, i.e., the middle class. The middle class is the economic engine of this country, and it is disappearing. Without a middle class having disposable income to spend, this economy grinds to halt, as we have already seen. Unfortunately, what has been happening is that even without cash to spend, even with wages stagnating, some people will buy stuff anyway.... on credit.
So I'm not letting the consumer entirely off the hook in this mess. We have had decades of overconsumption and just a general lack of common sense. I will be the first to admit that there are times I spent more than I should and should have saved more than I did; but I also am not living paycheck to paycheck, and many people are. And where did we get the idea that we should have McMansions for all? I have sat around a table with a group of ladies who were expounding on how it's just impossible to live in a house less than 4,000 square feet these days! Cavernous kitchens with pricey granite countertops and spa-like bathrooms have become the norm. I'm sure these ladies would feel claustrophobic in my little 1,300 square foot home where the master bath is probably the size of their linen closets, and they might be surprised to find that I intend to downsize from that! Quite frankly, many Americans just have too much stuff. I've been laughed at when I tell people my biggest TV is 16 inches and cost about $120. How many people would want to watch my puny TV vs. their $4,000 HD plasma one? But I look at it this way -- if you've got $4,000 sitting around and nothing to do with it, OK, but how many people do vs. how many people bought one of those $4,000 TVs lately? Maybe it's a generational thing, but I think all of us wage slaves need to start saving more (and don't put everything in the stock market!) and come down to earth about what we should be buying. Our parents may have done it the old-fashioned way, but they still have their money while a lot of younger people in this country have taken out balloon payment mortgages and seen their credit card interest rates climb through the roof.
Which brings me to the subject of accountability. Most people of my generation and older would never NOT pay our mortgages if we were capable of doing so, even if the price of our homes (temporarily) fell below what we owed on it. Yet, this mortgage crisis has been seriously worsened by people who are willing to just walk away and let the bank hold the bag for their debt. Tens of thousands of people have lost their jobs, entire companies have gone under, in part because they should never have written the mortgages to begin with, but also because even people who could pay their mortgages just walked away instead. Where's the sense of personal responsibility? We need to be willing to say "NO" to ourselves sometimes, something that is becoming increasingly hard to do in such a materialistic society. It's time for all of us to take stock of just how much we need vs. how much we want.
