The Democrats are blaming Bush, the Republicans point to the Democratic Congress, the lenders are blaming the consumer and the borrowers ask the banks why they were given a loan they couldn’t afford. So whose fault is this big mess?
The media is calling this the biggest economic crisis since 1929. It really started with Enron, although I don’t know if that led to everything else, the greed of Enron was not isolated to that company. Greedy lending institutions awarded mortgages to people who could not afford to make the payments when rates adjusted. They (both the lenders and the consumers) assumed homes would continue to increase in value, but they obviously didn’t. Dropping home values and rising mortgage rates combined with salaries that did not rise as expected (“I’ll be making more money by the time our mortgage adjusts”) to force thousands into foreclosure. Mortgage companies suddenly found themselves owning homes they could not sell for what was owed on them and the mortgage companies began folding like a house of cards. Investment bankers, who had invested in mortgage companies were in trouble. Stocks dropped sending the investment banks further into the red. This week, Lehman Brothers folded and took with them AIG, who was their insurer. The chain of events started with greed. False home values, unwise lenders and consumers, selfish politicians with ear marks and pork to benefit themselves and their cronies all contributed to what may be the closes we have been to total economic collapse in 80 years.
The big surprise to me is how the stock market has experienced its largest two day increase in over six years after the federal government pledged to bail out all these failing companies. Seriously?! What, in our nations history, has instilled such confidence in our government’s ability to handle money? Maybe it’s the record deficit. Maybe the money we just borrowed from China has encouraged investors to trust our government’s economic decision making process. Maybe Obama will get elected and raise our taxes enough to pay for it all. Maybe McCain will win the war on terror and Iraq will pay us back. Maybe not.
California is not any better off. The budget was 81 days late and no one in the legislature cares. They laugh in the face of the Governor when he threatens consequences. The Governor now wants to spend millions we don’t have on a special election to borrow money from the lottery. Isn’t that money supposed to go to education? Hasn’t Schwarzenegger raped the pubic schools enough? He also wants to create an emergency fund (with what?) to help prevent future financial emergencies.
Last year I opened a special account to save for a new TV. I hoped to siphon off a little each month and buy the big screen I have been waiting for. Now, I have to tell you, I am much better at managing my money that the State of California, and I can tell you that you can have as many accounts as you want; they do no good if you don’t have any money in them… I still don’t have a big screen TV.
Truth be told, we have poor leadership (that may be the most non-partisan group of all politicians), making selfish decisions. We have greedy corporations gouging the public with virtually no oversight. We are overtaxed and underpaid. We are under-insured. The government isn’t doing its job serving the people because it is too busy trying serve itself. We need good leadership, without more taxes. We need people to step up and do what is best for the folks rather than what seems best to themselves. I still say “fire em all!”