As everyone jumps to point their finger at who got us into this economic mess, we must recognize that pointing our fingers at everyone does not help the solution at all. That said, we must understand where the problems lie to be able to fix this mess.
The obvious cause is the credit market in America, with too much credit being given to unworthy borrowers. I think most sane analysts are in agreement of this fact. If this is the case, the first solution at the top level must be to stop this act. By continuing to bail out credit card companies (personal credit), banks (mortgage credit), and the financial arms of auto manufacturers (car credit), we are allowing the culprits to continue with this reckless lending. Whether these companies are too big to fail is the wrong question. The right question is whether they have halted the practice of lending to unworthy borrowers. Personally, I do not think Amex, Capital One, or GMAC have changed their lending models at all.
With that, I would like to bring to light an article that I think everyone should read, called “The Shallowest Generation“, by James Quinn. While I do not agree with his thesis, the article does a great job explaining what our country has been living off of the past 30 years and the mentality that has become us, one of “laggardship” as he calls it. I do not agree that Baby Boomers are solely the cause of this problem, as the generation of 20-40 year-olds are just as responsible. While they may not be the leaders of the companies and government, they are still consuming just as much on the borrowed dime.
Other than that, the article is extremely detailed, yet simply written. Many of the stats he brings up, while not original, are staggering and brought together for the first time.
“The brutal necessary lesson that should have been learned is that if you loan money to people who can’t pay you back, your bank will go bankrupt. The “poor” people who made a bad decision in buying homes and cars they couldn’t afford have lost those homes and cars. The banks made a bad business decision in making those loans. The taxpayer was not involved in these business transactions. This is where Hank Paulson, Ben Bernanke and George Bush, formerly free market capitalists, decided to commit our grandchildren’s money to bailing out the horribly run financial institutions. Our government has chosen to allow these banks off the hook for their bad business decisions at the expense of taxpayers. Rewarding bad decisions and bad behavior will lead to more bad decisions and more bad behavior. The government has made a dreadful decision that will haunt our country for generations. Now the Federal Reserve has lowered interest rates to 1% again. This is where this horrible nightmare started. The massive printing of currency throughout the world will ultimately lead to a hyperinflationary bust. The law of unintended consequences can be devastating.”
Read on and learn…
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