So, I could only go through the first page of this
article till I had to stop reading it. Without directly approaching a key issue (at least in the first page) this article gets at what I see to be the key to our current financial crisis. The complete and utter inability of Americans to live within our means. The woman highlighted in this article had an good paying job, bought a house well within her price range, and seemed to have everything going for her. Then she decided to refinance her home with a higher interest rate to help consolidate her debt (why people give such private information to newspapers is beyond me but that is a topic for another post).
Why does someone with such a well paying job and low mortgage payment (her initial mortgage payment was probably in the range of $1200-$1300 depending on the down payment) end up in such bad shape. Especially considering she should have plenty leftover for expenses, savings, retirement, child care costs, etc.
Well, the problem is that our back-ass consumerist culture drove her into this position. She probably had good credit going into this situation therefore she received roughly 20 credit card offers each week...of course she couldn't resist setting up at least one of them since the interest rates seemed so low and spending limit so high. Next thing you know after a couple of shopping sprees at Best Buy, Nordstrom, and BB&B she is $15-20k (maybe more) in the hole to MBNA with interest payments over 20%. Awesome.
Obviously the best way out of the situation is to cash in on a little of equity on her house (whose value has skyrocketed due to an artificially low interest rate and mortgage lenders on crack) to pay off the bills and get back on track. So what if the rate is a little higher and there is a little more risk. No big deal the good times are here to stay!
WELCOME TO 2008! The economy is now in the shits, your mortgage rate is going through the roof, even if you wanted to unload the house the market is tanking and you will end up taking a loss. Time for foreclosure and the end of the American Dream.
This, my friends, is why I am against the stimulus package that Congress recently passed. It is doing nothing to help solve the problem of people overspending on shit they don't need (yes Stan, I know you will be right behind me to give the money back to Uncle Sam). There is something to be said for personal responsibility. Obviously we need to do more to help the poor and John Edwards' is spot on when he talks about the two Americas (
as hypocritical as that may be), but do people making $90k a year really need a bail out?
