To be sure there is enough blame to go around and those fellows driving off from a failed company in a limo are easy targets and many certainly deserve what they get (or don’t get as the case may be), but if you want to see the real culprit
Americans should collectively look in the mirror. :yh_cry
Let’s go back to the late1960s and early 70’s when things started to change. We began to think we deserved it all and could have it all, we were told women were unfulfilled and should seek careers and many did. For those who were married it meant more money for the family to spend, bigger houses with all the accoutrements. Because this created more demand, the working wife went from an individual choice to a necessity for many families and they too demanded more and bigger of everything, they drove the economy for years and years, the snowball was rolling.
To keep the momentum going, to keep up with the Joneses if you will, families began to buy houses that stretched their budgets (I remember going to a friend’s large luxurious house¦with no furniture, a dining table would come next year we were told. A house was no longer a home and some people thought it a necessity to buy a bigger one every few years, after all the value kept rising.
Because we needed ever more stuff to put in the larger home and to play with, we began to tap our home equity and instead of paying down a mortgage, we added to it. Our house was no longer a home but an ATM.
When that didn’t work sufficiently we used credit cards to maintain our standard of living, the snowball kept rolling. Our idea of living within our means meant meeting the monthly minimum payment on our Visa card. :rolleyes: Today the average American debt is $120,000 and the average savings rate is zero. Household wealth and net worth are dropping.
With the ever growing value of homes generated by ever growing demand, there appeared no reason to not buy a house whether one could afford it or not, a worse case scenario would mean we still make a few bucks if we had to sell, right?
Certainly all this buying and accumulation of stuff with someone elses money kept the economy humming, creating jobs and more demand, but it was a house of cards that has now come tumbling down. In other words, we were living beyond our means, not an especially complicated concept. :-2
Have we learned our lesson, probably not, but that may not matter because the price of getting us out of the mess we are in will require massive higher taxes of all kinds for years to come and that will hit the middle class regardless of what a politician tells you.
It’s time to stop crying about the people who took advantage of us and start owning up the fact that we created this mess with our own brand of personal greed. X-boxes, 200 CDs, cable TV and a cell phone are not necessities and neither is granite counter tops and leased cars you could not afford to buy. :-5
