Living in a Scary Economic World

Living in a Scary Economic World

What’s happening in the US economy is no longer just the usual unpleasantness of a downturn in the normal economic cycle.  What is happening now is major.  And for those of us who are relying on paying day-to-day expenses from investment income or with pensions from companies now looking at bankruptcy, it is terrifying.  Terror is not a healthy place to live.

Even worse, we are now being required as taxpayers to bail out the people who made the bad decisions that created this mess.  The ones who thought subprime lending was a terrific moneymaker.  The ones who thought loosening the standards for mortgage credit was an intelligent step in a consumer environment that was already overextended.  The ones who blythely told homebuyers eager to move into a dream home well beyond their means “We can get you into this house.”

And yes, the homebuyers who marched blindly down High Rollers Highway believing the real estate agents and mortgage brokers rather than their checkbook balances.   Much as every person who contributed to this mess and made a profit deserves to be flogged, the buyers are not innocent little sheep either.  No one rolled back the requirement that you know what you can afford before you buy a house.  Before you buy anything.

The most frustrating aspect of all this is that we just did it twenty years ago.  How did an entire financial industry forget what we learned then–that it is way too easy to get carried away with selling homes that people cannot afford at prices higher than the homes are worth?  We are smart enough to  put equipment on Mars to look for water but we can’t remember that home prices sometimes go down?  No way can an entire sector of the US economy be that inept.  The fantasy was just too enticing:  this time, prices won’t go down.  Yeah, right.

There’s a lot that went wrong and a lot of people to blame for getting us into this mess.  That doesn’t change the fact that we need to live through it.  How do we do that?

Some of it is a matter of stress management.  Be sure to give yourself a strong and frequent dose of the things that help you be calm.  (Hint: Neither durgs or alcohol are legitimate tools in this quest.)  Walk the dog.  Meditate.  Call a friend who makes you laugh.  Try to keep the stress reduction to dollars spent ratio high.  Forget the day at the spa.  Go watch the sunset instead.

Some of it is basic common sense–like not making any knee-jerk decisions.  Postponing major expenditures when you can is a good idea.  And focus on your health, too.  Good lifestyle choices will make it easier to deal with the stress. but they also make you less likely to need expensive medical procedures.

But just being a spectator about having to pay for this mess as a taxpayer will make your blood boil.  Enduring that unfairness silently is not a good idea.  We need to do something.  And that something is to let “the government”–your senators and congressmen, the President, and whoever you can find an e-mail address for–know just how wrong and unfair this is.  And that we expect a far more equitable and effective solution this time.  The ones who made the mess need to suffer significant negative consequences from it. REALLY significant.

Don’t tell me there’s no legal means to do that.  If the government can justify pawing through my carry-on at the airport, they can find a way to get the money these jerks made during the boom into the Treasury to offset the mess they handed off to us to clean up.  This is not spitefulness.  This is an important piece of getting it right.

People who don’t have to deal with the consequences of their behavior don’t learn from their mistakes.  They do the same stupid things again and again. Then they are the first ones in line when things go wrong because it was so easy to dump the problem in someone else’s lap the last time.

Yes, the government needs to step in.  Yes, putting the taxpayers on the hook to get things stablized is probably unavoidable.  But we can’t let them stop there.  Make some noise.   This is not about an act of nature and people unintentionally in harm’s way.  This is about greed and bad business decisions made by people with annual incomes in the millions.

There is nothing in The Constitution about bailing out people who make bad decisions.  This is a national emergency and warrants those kinds of powers and actions.  That doesn’t mean giving the ones who created it a free pass.  Tell your legislators what you think.  Tell them more than once.  Enough is enough.

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