What an absolutely crappy year when you look at the economic changes we have witnessed! I say this because we ALL have seen it and felt it. I’ve read article after article and heard commentary after commentary on the breadth of those affected! In past recessions (namely the down turn we experienced in 2001), the collapses seemed regional not global and while one industry was failing another was flourishing. Not this time around! With such a global crisis and no solution at hand, the blame game continues! Here is a short list compiled by Joe Miller and Brooks Jackson at factcheck.org:
- The Federal Reserve, which slashed interest rates after the dot-com bubble burst, making credit cheap.
- Homebuyers, who took advantage of easy credit to bid up the prices of homes excessively.
- Congress, which continues to support a mortgage tax deduction that gives consumers a tax incentive to buy more expensive houses.
- Real estate agents, most of whom work for the sellers rather than the buyers and who earned higher commissions from selling more expensive homes.
- The Clinton administration, which pushed for less stringent credit and down payment requirements for working- and middle-class families.
- Mortgage brokers, who offered less-credit-worthy homebuyers sub prime, adjustable rate loans with low initial payments, but exploding interest rates.
- Former Federal Reserve chairman Alan Greenspan, who in 2004, near the peak of the housing bubble, encouraged Americans to take out adjustable rate mortgages.
- Wall Street firms, who paid too little attention to the quality of the risky loans that they bundled into Mortgage Backed Securities (MBS), and issued bonds using those securities as collateral.
- The Bush administration, which failed to provide needed government oversight of the increasingly dicey mortgage-backed securities market.
- Collective delusion, or a belief on the part of all parties that home prices would keep rising forever, no matter how high or how fast they had already gone up.
I am fascinated by this list and feel compelled to add myself to it as a consumer. A consumer who lives in the US and has become spoiled by the idea I can have anything I want, anytime I want it. My children are learning the same thing and my parents are the ones who taught me. So here we stand, a nation of gluttons three generations deep. The financial collapse, the environmental catastrophe, even the healthcare crisis all brought on by an attitude of excess! Too much credit, too much greed, too much greenhouse gases, too much trash, too much fatty food, too much processed sugar, too many pharmaceuticals.
I believe we have the power to change our world, both near and far! Living within our means is a great start, taking care of our environment in small ways, giving our bodies a chance to work as designed. Mostly, we need to stop blaming and take responsibility. We ALL got ourselves into this mess; it will take us all to get out. May sound overly simple but most often the best solutions are just that – SIMPLE!
Tags: economy, fiscal responsibility
