September 19, 2008

We really do need "change"

We shouldn’t be surprised by the financial meltdown at Lehman Brothers, AIG, and Merrill Lynch. Banks involved in the “sub-prime” mortgage crisis took a big hit. They were loaning money to folks who couldn’t really afford the huge mortgage payments they were assuming. There wasn’t enough collateral or ability to re-pay the loans, and the sheer volume of this risk began a snowballing of no confidence in those mortgage papers.

Others involved in this chicanery, from investment banks to insurance companies, are now feeling the impact.

For decades, “financial institutions” have been sending out credit cards to anyone with body temperature, not to mention canines, felines, and other varied critters. Dealing with high volume, they worried very little about individuals who found themselves upside-down in indebtedness they could ill afford. South Dakota was a witting enabler for the charlatans purveying this crap.

Mortgage lenders, fueled by a government and social environment that suggested everyone should own a nice home – whether or not they could really afford it – were warmly greeted by the masses and gained good traction.

Alas, that good traction eventually lost ground quickly on the slippery slope of sub-prime loans. By that time, the greedy lenders determined that their customers wouldn’t be able to re-pay the burgeoning collective debt encompassed in the sub-prime loans. The jig was up.

We all recognize that our federal fiscal health is on the critical list. Why would we expect otherwise, when federal policies promote “spend, spend, spend,” within both government and the private sector? Didn’t we all just love those “stimulus” checks this year?

The notion of “saving” rather than “spending” went out of vogue more than 30 years ago. It’s time we embrace the common-sense approach that you shouldn’t spend more than you have.
More than that, we should hold our government accountable to adopt fiscal policies that reflect common sense. Perhaps that’s too much to expect of the U.S. Congress, but we shouldn’t give up the struggle.


cp said...

Didn’t we all just love those “stimulus” checks this year?

No, some of us thought they were a really bad idea.

LM said...

And, indeed, they were. It almost defies logic that many Congressional leaders are promoting the idea of yet another "stimulus" program.

Roger said...

"South Dakota was a witting enabler for the charlatans purveying this crap."

"This crap" refers to the credit card companies pushing cards at everyone and then charging outrageous interest rates on outstanding balances. SD and Governor Janklow had a lot to do with this by removing any cap on interest rates in the state. When the US Congress said that interest rate caps were dependent on where the credit card companies were headquartered, and not where the customers lived, the gates were open for the greed that now prevails in the credit card industry. Yes, SD is a witting, and willing, participant in the problems we are seeing. And now the Bush Administration wants the public to assume all these risky loans, not only in real estate, but in credit cards and auto loans as well. It makes no sense for the American taxpayer.