We have only ourselves to blame - Economics 101

Everyone is talking about the collapse of three of the five big players on Wall Street (Bear Stearns, Lehman Brothers and the quick sale of Merril Lynch) - but I don't hear a lot of talk about who is responsible.

The answer is....look in the mirror. If you're a baby-boomers or gen-X-ers who got greedy and thought you could have your cake and eat it too -- you are responsible for this mess.

Sure, there are definitely some bigger players here who are actually having to pay up too (real estate "flippers" and speculators) - but it's going to end up costing all of us unfortunately.

What amazes me most is that the high-paid Wall Street wizards didn't see this coming.

For years Alan Greenspan has warned us of the debt load that too many Americans are carrying.
For the last decade - people have been drunk on the "cheap money" available to borrow for things at low interest rates. And when borrowing standards were eased to allow a home mortgage with NO DOWN PAYMENT -- I saw the writing on the wall. ("gee -- it must be free!") "Don't bother me with old fashioned rules about saving up for a downpayment....I want it NOW! And I want to get my way! Wah!"

Yes, all of the spoiled Americans didn't want to save up the traditional 20% downpayment before buying a home -- so instead we bought PMI...you know, "property mortgage insurance"...after all - you can "insure" your way out of almost anything, can't you?

Well guess who backs that PMI? Lenders.....investors......ultimately you and me with our 401k and mutual funds.

So many American dreamers bought their homes - with no money down on adjustable rate mortgages....which got adjusted up as the economy changed. Oh sure, they were told this was a possibility...but that's just more "don't bother me with the facts" kind of nonsense that no one wants to hear when you're staring your dream home in the face. And bankers were all too eager to lend money to people buried in debt. ("oh sure Mrs. Jones, you can afford that $2,000 house payment with your $3,000 a month income, buy it!")

Investors buying these "mortgage-backed securities" speculated that home values would continue to rise forever. Duh. Does anyone pay attention to history any more?

So the bubble popped and people with high interest rates found themselves unable to make their house payment. Now in the "olden days" if you had put your 20% down on your home purchase -- you'd do almost anything to avoid losing that equity you worked so long at saving (you'd get a second job, sell that second car, take the bus...) but in the greedy baby-boom economics world -- you have "nothing to lose" since you didn't put anything into it.....so you just shrug your shoulders and say...."gee, this is hard, I think I'll go rent an apartment instead....see ya"....leaving someone else to hold the bag.

Then magnify it over all of the "no downpayment" mortgages granted in the last 10 years and you get.....wallah.....exactly what we're seeing today.

Let's stop all of the "entitlement-minded" people who think our government will bail them out of anything -- and get back to each of us being responsible for our actions. Whether it be hurricaines, tornadoes, or downpayments - the buck stops here...with you and me. Each of us needs to be responsible for our spending habits...and live within our means -- starting with our government. That bottomless pit called the Federal Government is backed by the productive workers of this great nation. It's you and me folks.

Let's get back to saving money for a rainy day...and saving up to pay cash for things. Most luxuries in life are not "needs" but "wants" and put them in the priority they deserve. At the bottom of the list after the basics are paid for, not on a credit card. (and people....let's not build in flood planes...!)

So now that we're in this mess, what do we do? The most imporatant thing is - DON'T PANIC. Leave your investments in place. Some people can make some small adjustments to their lifestyle (stop buying that latte every morning on the way to work, take the bus more often,) or if you've really over-indulged you'll need to take more drastic action (sell cars you can't afford, get a 2nd job, etc). Most importantly, get on a budget. (that means adding up what you earn and make a PLAN not to spend any more than that). Include some savings in your plan. If you're really upside-down talk to a qualified consumer credit coach.

The future of our country rests on individuals being responsible for themselves.

If the spoiled brats of our country don't reign in their spending -- it will bankrupt us all. Don't just laugh when your co-worker tells you they just bought a new Mac that they know they can't pay for. Tell them that's not repsonsible -- and that it was a dumb move.

Maybe if it becomes socially acceptable to be responsible again -- more people will do it.

As a conservative in this post-modern world I have to admit I'm angry. I'm so tired of watching all the liberals keep thinking you can spend your way out of problems. You can't. Sooner or later, someone has to pay. (and stop digging into my pocket to pay for it!) I'm tired of watching everyone around me bury themselves in excess and debt - all the while I live very frugally saving money and paying cash for the things I buy. Yes, it really doesn't give "instant gratification" but I enjoy the things I buy much better knowing they're paid for. I have a house payment I can afford at a fixed rate of interest. Boring as that is, it feels good. Try it.