I realize that this opinion I’m about to share might not be popular with everyone, but it’s something that’s just been eating at me the last several weeks, with the economy doing poorly and constant talk in the news about the mortgage crisis.
Erica posted this NY Times article last week from 1999, indicating how this whole mess got started. Let’s take a quick look at 2 paragraphs that got my attention:
Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.
In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates — anywhere from three to four percentage points higher than conventional loans.
So that’s pretty much how we got where we are. Everyone’s blaming this on the “Bush Administration.” Yet it’s roots were clearly in the Clinton years, so let’s share the blame historically, eh? The lack of oversight during this administration clearly contributed heavily to where we are, but it angers me to hear people talk about Bush being solely responsible for running the economy into the ground.
Next: there is PLENTY o’blame to go around regarding the lack of ethics of these predatory lenders who allowed people to get in way over their heads. These lenders had to know that there would come a time (during an economic downturn) when the people they were lending to would not be able to pay their mortgages. It’s disgusting that these people/companies were getting rich off this scheme.
But, the problem that is really getting to me (and at the heart of this post) is the serious lack of self-control and personal responsibility that is running rampant in this country. The idea that if you want it, well, you can have it! now! has somehow replaced the idea that if you can’t afford it, you shouldn’t be buying it. This means that if you can only afford a $200,000 house, you probably shouldn’t be buying a $400,000 house. And then you shouldn’t look to the government to bail you out when you got in over your head. I completely understand that there are people who are losing their homes now through no short-sightedness of their own - injury, job loss, death of a spouse – and that makes me really sad. This kind of thing will happen in any economy, unfortunately. But it’s those people who made a choice to overextend themselves and live outside of their means that I don’t feel sorry for.
More than all of this, I worry about what this attitude means for my kids. We try hard to live within our means…are they seeing that? Or does the “I deserve whatever I want whether I can afford it or not” attitude of the world seep in? I want them to know how blessed they are to have enough; not everything they want, but plenty in terms of what most of the world has. It really, really bothers me.
I wrote this last night, and let it sit overnight to be sure I wanted to post it. When I checked my email this morning, there was something in this Weekly Wisdom email that I had to share: “Giving is the only antidote to greed.” So that paragraph above where I talk about what’s really bothering me? At least this reminds me that there is something we can do with our kids, besides talking about our blessings and appreciating what we have, and living within our means…we can teach them generosity.
(Shannon at Rocks in my Dryer wrote something much more eloquent on this topic today, too…check it out.)
Filed under: me and my thoughts, parenting, politics
That has been eating at me too! I cannot get over the fact that main reason we are in this mess is because the democrats wanted to get everyone into a house, no matter what their credit or job history looked like. What about all of us hardworking people who only purchased what we could afford? We didn’t fall into the ARM mortgage trap and we did our research. Aaron called Akin’s office several times over the past couple weeks, and Akin’s reps said he would not be voting for the bailout plan. Too bad it passed.
And, don’t get me started on all of the “pork” in this bailout plan.
we were trying to figure out the whole bail out situation on friday night w/ friends. does anyone know the answer to this:
ok, out of all the loans that were given out, only 4% were foreclosed. when the banks foreclose, they are going to sell the homes for what, maybe half price. so, where did they come up with needing $700 billion?
My brother was a guest on a 97.1 local talk radio segment one morning this summer. He was discussing this same thing. The mortgage “crisis” didn’t just happen. It has been years and years in the making. Living beyond our means didn’t just start either but the government became big time enablers for that behavior.
To quote Crosby, Stills, Nash and Young “teach your children well”. Then pray over them.
Here’s a link to Dave Ramsey’s solution: http://www.daveramsey.com/etc/fed_bailout/
I’m no financial expert, but it makes sense to me.
We always talk about this – even small scale. If a furniture company advertises that there is no interest or payment for 2 years and this appeals to you…THINK AGAIN! I mean, if you want furniture you can’t pay for until 2 years pass, then you can’t afford the furniture. Period. Teaching this to children is hard. But I vow to try my very best to instill the value of money & wise choices.
Nicole,
You go, girl! Once again you have said it and said it well. Do we have another Sarah Palin on our hands?
God bless your for being so well grounded.
Poppa Sam
Very well put Nic… it’s kinda scary that we as a nation have taken one more small step towards socialism with this bailout package.
My main problem is that now, people/industries are standing in line for more bailout money instead of having to fall on their faces. The automotive industry isn’t too far away from asking the government for billions, the Governator (Schwarzenegger) is on the brink of asking for a $7 billion bailout for California then who knows who which states (Illinois, Michigan for sure!) will be behind him asking for money if California is granted that. Where does it stop? This is why big government is such a crock, nothing like having a bunch of out-of touch politicians spend our money for us. I hope we as voters are heard loudly during this election so these morons who agreed to the bailout are looking for a job come the beginning of January.
As to Suzanne’s question on why $700 billion and not less… the way I understand it is two-fold. One is that there is no legit explanation, it’s just a number that is supposed to get the job done but not high enough totally scare the crap out of the country. The other is that they will be incrementally releasing “smaller” amounts of money ($100-150 billion at first) to begin this “recovery.” Along these lines, the thought is that if they would have asked for $1 trillion it would have invoked more uncertainty but if they had asked for $500 billion it may not have been enough (and God forbid Congress had to ask for more money at a later date, then their constituents may not have trusted their initial judgment… ha-ha). Getting as high as $700 billion is supposed to be the last resort, but it’s more likely a situation of give them an inch and they will take a mile. Fortunately, Congress & our new President will have to vote again on another package should they end up needing more than $700 billion. Unfortunately, we may as well call ourselves communists if that gets beyond this initial $700 billion.
Great story & accompanying video explaining this at this link:
http://www.foxbusiness.com/story/markets/economy/did-arrive–billion/
thanks zach. i’m passing that link on to our friends. we seriously sat around for a half hour trying to figure it out. we had everything short of flow charts and graphs going on.