What The Heck is WRONG with Consumers?

Over the last few months, all of us have been battered with what seems like an endless barrage of news concerning financial meltdowns. First, it was the subprime mortgage market. Next, it was the debt market that relied on the subprime mortgage markets. As banks and financial houses continued to fold, the stock market started its tumble. As consumer confidence eroded, credit slowed to a crawl and then stopped. Small businesses can no longer get the loans required to start up. Without the small businesses, people cannot get jobs. Without jobs, people cannot purchase durable goods or invest in the future through the stock market. Unemployment is skyrocketing, and the odds are that we have not seen the worst of it. The so-called "bailout" programs being touted by the current administration and Congress promise to leave so much debt on the American ledger, with no clear cut plan as to how this debt should be paid back, that I fear our children and children's children will be paying the price for our mistakes.

Yes, I said OUR mistakes. A lot of ink has been wasted writing on how the banks are to blame for giving out mortgages to people who should not have qualified in the first place. Of COURSE they are to blame, those evil "predatory lenders" who "trapped consumers" and caused this housing crisis in the first place. At the same time, I feel that not enough attention has been paid to the duties of the individuals to take responsibility for their own actions. Many individuals no doubt knew that there were issues with their income levels and possibility of repayment, yet they took on an inordinate amount of debt without doing the necessary research required. STUPID STUPID STUPID! Don't try to tell me that "these were unsophisticated buyers" who "were waylaid into unfair terms by evil doers." Many of these buyers know exactly what they need to to to manipulate the system. Their mistakes are what we are paying for now, not just those of the banks and other financial institutions. The bailouts will allow these individuals to walk away scott free.

Now a lot of you will read this and merely think that I am spouting off about stuff I know nothing about. I mean, I am more fortunate than a lot of people. What I do know are the lessons of my youth. I know of people who could not afford food and shelter yet were working and spending their money on designer clothes. I know of college kids who rang up incredible amounts of debt on credit cards and then were "shocked" when they were unable to pay. YOU ALWAYS HAVE TO PAY MONEY BACK-SOMETIMES WITH INTEREST!!! Geez. How simple a lesson can that be? Now, I know that there are a lot of hard working people, some of whom are friends of mine, out there just trying to make ends meet. I know that they do not HAVE credit cards or have regular mortgages that they struggle to pay each month. Is it fair to them to have to pay for the mistakes of others?

I was raised in a household where the operative mantra was "save save save." My parents were relatively successful, yet you would not have known it by looking at us. We did not wear designer clothes or have designer accessories, my brother's first car was a $500 1973 Plymouth Duster with a CB radio (in 1985) that was sold later on for the exact same amount. I have had a job of some sort continuously since I was 14 years old, and I have saved every step of the way. Even today, I have some hobbies that people might consider a waste of money, but I ALWAYS put 10% of EVERY paycheck into regular old savings. Nowadays, this is a lot easier than in the past, but I did this even when money was extremely tight. At those times, I did without. Even now, however, I am trying to find ways to cut expenses (not easy in a city that has the highest taxes of any city in the country-including NY). My bills are paid off first every month and THEN the savings go in. I factor in the amount I need for food and transportation, and then I look at what is left. Starting in February, that means student loan payments. This month, I cancelled my 10 year (!) comics subscription solely because I felt that, at this point, it was a waste of my money. Through all of my struggles, from a student on through graduate school and while paying for law school, I have never had to depend on ANYONE to pay my bills. I managed on my own and took pride in that fact.

The name of this blog is "Rants and Ramblings", and this post is a little of both. Today, I saw the news that consumer groups are trying to convince Congress to allow banks to forgive CREDIT CARD DEBT. WHAT? REALLY? So pretty much, the people who are responsible for putting us in this situation get a FREE PASS? Whose fault is it that they are in so much debt? WHOSE? Not mine! Yet, I am paying for someone else's designer clothes, expensive dining out habit, or comic book habit! Is that fair to me? Is that fair to those friends of mine who are doing without credit cards and living paycheck to paycheck?

I agree that something has to be done to help the economy, but I do not support a wholesale bailout of companies nor of individuals saddled with credit card debt. Sure, give them the money to get out of their current situation, but DON'T make it a gift. Make them pay it back. Garnish wages. Garnish company profits. Make the stockholders decide whether or not a company is being fiscally responsible. Only by taking responsibility for the current crisis can companies and individuals learn the easiest fundamental truth about economics: if you spend more than what you earn, you will be in DEBT!!