Thursday, September 18, 2008

I Have Seen the Enemy - And, Yes, It Is Us Too

I have had several conversations in the last few days trying to understand the current financial crisis and its relationship to the housing crisis of the last year or more. It is clear to me that aspects of this issue are simply beyond my understanding at this time, but I am trying. Given the Congress' decision to adjourn it seems it may be beyond its understanding as well.

It seems that a part of the problem lies with an earnest desire on the part of well meaning folks to see more and more people own their own homes. But beyond that it just seems that banks and mortgage companies pushed too hard, and handed out too many risky loans, and that when this problem became such that could impact everyone in a significant manner, there was no adequate watchdog, whether that watchdog be the media or the government.

And from what I can tell it seems like the government simply has to establish some regulatory boundaries or set up some tripwires so that we can all know when we're close to the edge of such a crisis again.

Having said all that, what has been on my mind the last few days is the role that American home buyers have played in this crisis. It seems everyone is pointing his or her finger at the congress, the President, the regulatory agencies, the bank executives, and all sorts of other nefarious people and entitries, but to some degree we should also be pointing our fingers at ourselves.

There being so many people who give lip service to Jesus, or who don't really believe in Him as Son of God, yet like to quote the Sermon on the Mount as their personal ethic, try this on for size: "Why do you see the speck that is in your brother's eye but do not notice the log that is in your own eye?"

Without countless ordinary american people signing on to risky and presumptuous loans we would not be in this mess. And to blame the whole thing on the government or on corporate executives is a failure to accept personal responsibility.

Years ago when we were trying to move so as to keep our kids in the NW Guilford school district (we eneded up being able to without moving due to a grandfatehr clause), I talked to various banks and lending institutions. I was appalled, APPALLED, at the loans that these banks were happy to extend to me. It would have been foolhardy in the extreme for me to take on one of those loans, and it was foolhardy for them to offer them to me. Oh yeah, they had all their little tricks of variable rates and such to draw me in. And sure, I could have done it, and then had no money for anything else.

In my own opinion a fair amount of greed and presumption on the part of the American people has also driven us into this crisis. The greed is the craving for bigger and better - in this case housing. The presumption is the idea that house prices would forever appreciate.

I know, some of the peopel defaulting are first time homeowners just trying to own a house. In many cases family crisis, job loss, and divorce has excerbated the problem on the personal level. Many people have defaulted on perfecrtly resonable loans due to such circumstances.

And I can hardly fault peopel for wanting to own their own home (though the merits of home ownership may be overrated).

But way too many risky loans were peddled to people who had no business accepting them - lower income people AND higher income people alike. In the latter case, in my judgment, greed, the need to say that one lives in such and such a neighborhood, covetousness for bigger and better, drove people into outright foolish financial committments.

I keep wondering, "Why weren't bells ringing or red flags waving?"

So before we chastise George Bush, Barney Frank, Barack Obama, John McCain or whomever else, maybe we should all as citizens take a deep breath and look at ourselves. We're over extended. Our personal debt is too high. In too many cases we have bought what we don't need with money we don't have. What is it it that has driven so many of us into risky, unwise, and in all too many cases, downright foolish financial decisions? Do we the people bear no blame?

I think we do.

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