Posted by
Always To The Right on Friday, November 28, 2008 6:52:59 PM
All of this begins with the artificial escalation of home values
that began in the 1990s. Without those increases far outstripping
inflation, consumers would not have had the equity to leverage for more
spending. They would not have created a demand for even more debt,
which fed on itself in a vicious cycle as government policies created
profit on almost any kind of mortgage for short-term lenders.
The entire precipice was built on sand, and it’s now turning into
quicksand. For some, the lesson will come too late. For the rest of
us, it’s a lesson we need to learn for good. Many of us have heard the
advice our parents and grandparents learned in hard economic times: Don’t spend beyond your means.
Many in the previous couple of generations had a well-deserved
skepticism about credit, and they’ve been proven right yet again.
While we’re at it, Congress could use an instruction or two in
income-based spending, rather than asset-based spending. We’ve been
mortgaging the next several generations in order to pay for our own pet
programs for the last several decades. Maybe it’s time to stop doing
that as well.