Blinded by greed and fostered by fiscal irresponsibility, Americans find themselves mired in an economic meltdowns, the likes of which we have not seen since the Great Depression. That meltdown has now spread globally and the question begs for an answer-Why did it happen?
Its simple, and stated in the first sentence: greed and fiscal irresponsibility.
Several years back, My partner and began to be concerned about the state of the housing market. Our business takes us to the suburbs and everywhere, houses that formerly sold in the $ 100,00 range were not being priced in the $ 200,000 range,$ 200.000 homes were selling at $ 300,000 and so on. There was no end.
Homes sales were appreciating at astonomical rates and people with modest incomes were taking possession of over appreciated homes in record numbers. The essential problem was this: many of these people could not afford these over-valued homes and were the victims of the sub-prime schemes, their own basic ignorance of their financial strength, and to some degree, greed.
Yes, even the basic American has taken leave of senses in the desire to own more home than we can afford and to live above our means. Somewhere, someone put the idea in our heads that everyone has the right to own a home, even without the necesssary financial liquidity to pay the monthly mortgage.
Looking back, I'm very fortunate to have resisted the impulse to buy on inflated values of these homes. For that reason, I continue to rent and that has been a luxury that has served us well in the downside of an impulse driven industry. I knew in my heart that real estate was greatly appreciated and that such appreciation was a recent phenonmenon and subesequently geared by greed.
Americans were using their homes as ATM machines, using up vital equity for things such as Credit Card payoffs and unnecessary additions to their homes, much it based upon the deceitful advice of realtors and their own short sighted views on the potential worth of their homes as an investment.
Growing up, neighborhoods were fostered by homes where families stayed from generation to generation. You bought a home to stay in it, raise a family, perhaps even more than one generation. Along the way, and in our pursuit of fast capital we lost sight of that security afforded by that kind of stability. Opting for the transient life, we gave up that ideal, moving form home to home, buying and selling constantly, until the typical neighborhood of my youth was no more.
Our homes, our former staples of lasting security became disposable commodities, sold at will with the aim of financial enrichment each time we posited on another doorfront. We began moving and relocating at rapid pace and before long the transient nature of this so-called economic windfall began to catch up with us. It did, and now look where we are.
It's not just the frequent buying of selling of over-valued homes
and real estate that hovers over us like a dark cloud, we also owe our
current dismal situation, to our lifestyles. We live above our means and use credit cards as the panacea to achieve our short term objectives. At our peril, we have ignored the consequences of this fiscal irresponsibility and the burdensome load of unending debt weighs down on us on a daily basis. This burden is stressful and destabilizing.
The lack of available credit has a trickle down effect. Responsible credit is not available for the consumer, who in turn can't spend wisely, businesses can't pay bills and their employees, banks won't loan or extend credit to each other, mutual funds which are backed by commercial paper(Money) become devalued and the list goes on.
Now, we can do something about this. It involves reevaluating why we spend, where we spend and what we spend. Is our spending practical, impulse or emotion based? Do we spend out of need or simply want?
With this analysis on our spending habits we have to confront an essential that has got us into this mess-our desire to ever increase our wealth under shaky and unpredictable short term schemes. For too long few have reaped the rewards of enrichment at the expense of others. This has to stop across the board.
We have to control our greed and the constant preoccupation to aggrandize our wealth at all costs, often at the expense of the less fortunate. Real Estate has been a prime componnent in this mess. The family home should be a staple of security and equity should not be used as a variable to gamble upon.
Until the home is once again the anchor in the financial picture, the housing mess will go on. Until we stop looking for the pot of gold at every end of the spectrum and until we take a look at the sensible approach to long term security and not short term gain, we won't solve the problem.
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