Who do you blame for the financial crisis? How did giants like Bear Stearns, Merrill Lynch & Co. and Lehman Brothers crashed in matter months? Fannie Mae, Freddie Mac bailed out; AIG, GM, Chrysler need money and more money. 28 banks [1] have failed so far in 2009; millions of homes have been foreclosed; debt has skyrocketed; Federal Debt is…well, let’s not talk about it.
Everyone is looking for someone to blame. Wall Street greed, bonuses, bailouts, foreclosures have become the most loathed words in the recent months are some of the words – they have continually made headlines and probably will continue to do so. TV “financial” analysts yap away their analysis, predictions and what they say to earn their salary. It is an opportunistic world.
So, who is to really blame? Well, everyone.
An article in WSJ dated October 5, 2008 “For every “greedy” Wall Street banker, there were millions of Main Street Americans willing to live beyond their means.”
That statement is almost outrageous, but think – maybe it is an indication to reflect on ourselves. Yes, we do share the blame. Of course, the major blame falls on those who got greedy and greedier but in the end we lost.
How did that happen?
We the consumers lost sight of fiscal conservatism and then we lost sight of and personal responsibility. It is like digging a hole and falling into it and blaming the spade because it allowed us to dig in the first place!
In simple terms personal responsibility is acknowledging that one is solely responsible for the choices in one’s life. Choices were made; some passed and some failed.
We blame the Wall Street because our 401K tanked. We never glanced a look of concern at Wall Street when our 401K sky-rocketed. Well, I never did. I never made any big investments – still made some; and it didn’t pan out the way I expected. Well, let’s talk about my portfolio….on second thoughts, I better not. There is nothing to talk about. It is depressing.
Our fiscal responsibility starts with credit and ends with credit – it is a vicious cycle. We borrow from Peter to pay Paul; Peter got greedy and was eager to pounce on our weakness.
Ah, some good news – one city seems to be conservative in their spending and risk-taking ability – the city of Fargo [2] in North Dakota .
One billboard in ND during the 1970s read: ” North Dakota refuses to participate in a recession.” Strangely that message still holds true today for Fargo . In Fargo , home prices are holding steady, unemployment is low and morale is high. The State of North Dakota is one of only four with a budget surplus. Kudos to them!
I recently came across an article [3] which shows the amount of debt does the typical consumer have? How does that equate to income? Here are some figures that help put it in context for the approximately 111 million U.S. households:
- The average U.S. household has about $125,000 in debt, primarily as mortgages.
- Non-mortgage debts average about $23,000 per household.
- Household credit-card debts average about $8,600, but that figure is distorted by the relatively small percentage of households with high debts.
Motto going forward – conservative spending, liberal saving, and ready for anything!
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Sources:
1. Failed Bank list
2. A Placid North Dakota Asks, Recession? What Recession?
3. Consumer Debt
