Admit it. For at least the past ten years, America has been living ‘hog-wild’.
Expensive homes, cars, clothing, and endless supplies of ‘stuff’ that every family needs – supposedly.
Let’s also face the fact that each and every one of us has been living beyond the means of a system that encouraged excess. Federal, State & Local Government, our employers, our banks, businesses are all guilty of living on the edge by – creating a reckless atmosphere of social acceptability of debt.
If most statistics are correct, some of us have already experienced financial trouble as a result of being medically under-insured; the single leading cause of bankruptcy – unpaid medical bills. Shame on us for thinking that our families would be okay, and since we’re young, we can afford to gamble with the welfare of our family and cut corners under the guise of trying to get ahead.
Believe it or not, for the past ten years I’ve sat on the sidelines watching friends, neighbors, family members, and fellow Americans – virtually our entire society – fall victim to “The Boom”. What I’ve called a ponzi- scheme. To me, it’s been apparent that nobody ever thought the hay days of prosperity would ever come to an end. During The Boom, my personal philosophy was to pay down credit cards, auto debt, mortgage debt, and to prepare my family for the eventuality that it would come to an end. To me and my family, prosperity meant getting ahead of the curve; most importantly, it gave us the exciting opportunity to create independence from a terribly rotten system of credit and perpetual debt slavery.
One of the most difficult challenges for me was to stay ahead of the curve by not living beyond our family’s means. To prepare for the future; if times got tough, I would need to have my family adequately leveraged to withstand any economic storm. Believe me, in our society, that’s very hard to do when everybody around you is driving super expensive cars, buying beautiful new homes, and dressed to the nines; most of whom, by the way, are making a lot less money. I can’t tell you how many times I’ve been told by my wealthiest friends, “Santilli…you need to start spending some of that money…”.
My philosophy has always been, and always will be, “Save for a rainy day, live within my means, and stay away from Popeye’s Whimpy Financing that everyone was hooked on — like crack: ‘I’d gladly pay you Tuesday, for a hamburger today…” My wife and I have shunned the American psychosis of spend, spend, spend—credit, credit, credit—- and live like there’s no tomorrow.
Sadly, I can’t say the same philosophy was applied by anyone else I know. Wherever I turn, I see family members and friends who are so deep in debt, that they could barely even survive financially during prosperous times – living paycheck to paycheck, or not owning any of their fancy cars, toys or homes they could never afford to begin with. Incidentally, my brother & sister-in-law borrowed $450,000 on a home that was given to them by my wife’s family, and now the house is worth only $200,000! Guess what they have to show for it? Huge debt, stress, and hope that they both keep their jobs.
Regardless of our personal financial situations, I’m finding that there’s one common thread running through all us. Rich, poor, smart, uneducated, deep in debt, or debt-free; we all want to know who’s at fault. Of course, in this political season, candidates point fingers at each others party, and every level of each American class expresses an opinion of who is at fault, especially in the run up to the current crisis.
Today I read an interesting article that I want to share with everyone. The following is an excerpt from that Newsweek article republished from Factcheck.org. The article was unbiased, made sense, and I absolutely agreed; everyone is to blame. Unfortunately, we will not know anytime soon if merely knowing what, or who is to blame will provide the right answers or long lasting solutions.
The only certainty on this historic day, a day in fact, when our government approved $850 billion dollars of additional debt, is that every pillar of our government; our economy; and our society is at fault. The ultimate uncertainty is whether we will survive our international dominance, and further diminish our ability to grow the global economy. For now, I’ll continue to remain on the sidelines, helplessly watching my fellow Americans suffer and succumb to the system, hoping to see a day when everyone reaches their tipping point. Until then, I ask everyone to rightfully continue pointing the finger of blame in every direction. Everyone is to blame.
The Real Deal
So who is to blame? There’s plenty of blame to go around, and it doesn’t fasten only on one party or even mainly on what Washington did or didn’t do. As The Economist magazine noted recently, the problem is one of “layered irresponsibility … with hard-working homeowners and billionaire villains each playing a role.” Here’s a partial list of those alleged to be at fault:
- The Federal Reserve, which slashed interest rates after the dot-com bubble burst, making credit cheap.
- Home buyers, 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 downpayment requirements for working- and middle-class families.
- Mortgage brokers, who offered less-credit-worthy home buyers subprime, 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.
- An obscure accounting rule called mark-to-market, which can have the paradoxical result of making assets be worth less on paper than they are in reality during times of panic.
- 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.
This excerpt of the Newsweek article was republished with permission from factcheck.org
Republicans typically say “God Bless America” when they are trying to get potential voters pumped and patriotic; to buy into their phony nationalism. They wave flags, cry phony, and tell war stories, all in the effort to emote deep patriotism.
Today, I sincerely mean this, and not because I want everyone to follow my lead to the promise land….”God Bless the United States of America”…especially all the idiots who have destroyed it, each of whom are now charged with the task of rebuilding it.
It took all of us to get us in this mess, and I hope we can all come together to get us out. Like it or not, no American citizen can be excluded.
