Question; What is the root cause of our financial dilemma? - Page 2

tweak · #11 09-24-2008, 06:36 PM

I would say a complete lack of financial education on the part of the American people. As well as a gotta have it now mentality. What ever happened to saving money for things we wanted?

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vegasX5 · #12 09-24-2008, 07:27 PM

Well I was going to say Kevin Federline as well, but that's already taken so...

I think it's the habit of Americans (citizens all the way up to corporations and governments) using non-real "assets" like credit, equity, etc. to leverage their acquisition of higher value assets only thinking of the potential gain and equity growth (and subsequent increased consumption) without any regard for the potential risk or ramifications of their actions. It ties right back into an intrinsic sense of entitlement that nearly every American has without any sort of regard for the oversize "footprint" they have on the planet economically, environmentally, socially, etc. Unfortunately, this insatiable behavior over the last few decades was totally unsustainable, but until now, creative minds have found ways to delay the repurcussions by leveraging our relative economic and military strength. Lack of education, realism, integrity, leadership, personal and social responsibility, planning, foresight, foreign relations, etc. have only exacerbated the problems we face.

Eric5273 · #13 09-24-2008, 07:43 PM

I'll cut and paste what I wrote in another post:

The underlying problem with our economy is that too large a percentage of the wealth is controlled by too small a percentage of the population. As a healthy economy relies on consumer spending, it is important to keep money in the hands of the masses so that they can buy and buy more. So what do you do when the masses no longer have any money due to a steady declining of wages over the past 30 years?

Simple.....you let them borrow the money. You issue them credit cards, and more credit cards. And car loans to buy vehicles....and mortgages to buy homes....

And when the masses max out their credit cards? You issue them new ones with higher limits.

And when they can no longer afford the payment on a 3 year car loan? You start issuing 6 year car loans.

And when they can no longer afford the mortgage payment on a 30 year mortgage? You start issuing 40 and 50 year mortgages, and adjustable rate mortgages.

But eventually, you have to cut off the credit somewhere. And when you do, everything comes crumbling down. And that is where we are now.

ncx · #14 09-24-2008, 07:46 PM

Quote:

Originally Posted by The Cleaner

Greed, and corporate profits

Quote:

Originally Posted by MiCkEy

GREED

ding ding ding ding winna winna

motordavid · #15 09-24-2008, 08:11 PM

Some pretty cognet comments in this thread...
greed, (a catch-all term, but not far off), and esp.
the "gotta have it now" 'tude, of which all of us are
guilty to some degree.

Somewhere back aways, probably pre-bubble/late '90s,
us Boomers and the gen right behind us got caught up
in The Chase. A few of us were lucky/smart/more practical
and were able to avoid the debt encumberances then.

Post Bubble, into the new Wave, and it really just repeated
itself but in a different vein: housing, more credit to buy all
those things we missed the first go around, and the sense
that the boom was never gonna end. They always do, however.

From JoeSixPack to the Masters of the Universe, many were
caught up in this new Wave again. Add in the completely intertwined
labyrinth of mutual masturbation by Wall St, Fed, Politicos and
self-interest groups and the circle jerk, while momentarily satisfying,
will have to come to an end.

But, "they" won't/don't want to ever give up that control and chase of
the paper money power base...so, the next new deal and fix are formulated.

Things are really different, imo, this time. This chug along econ is not going
to be self-sustaining for long and I don't think we will be firing up Cohibas
and Macanudos this time next year, reminiscing about that "scare" of '08
and chortling up our cufflinked sleeves.

On the one hand I am pretty certain we will trundle "through" without
an utter depression; OTOH, I suspect things aren't going to revert to
2004 anytime soon. Some seriousazz fundamentals and soul searching
have changed the landscape.

As much as I read about the situ, I really can offer no fix or dramatic
advice. Those of us lucky enough to be debt free are not really above
it all, nor are there any rewards for our luck/better budgeting. I would
not want to be the ~65% or ~80% of the "avg households" in the US,
however. I do not know how they make ends meet, part of which is
an effect of the aforementioned Material World Fog most of us have
been consumed by.

At the risk of sounding like I'm going to sack cloth and ashes, I ain't;
but, all these "things", and the next layer of "better things" and the
lack of awareness or delusion on the part of many of us that pursue
these "things", at all levels, has come home to roost, imo.

Sadly, imo, the "gov't" will try to make it better or get us over it,
or out of it, but they cannot and will not. It is going to be what
it is. Pay a lot now and pay a lot more, later. We will collectively
pull in our amoeba tentacles for awhile, but the landscape will remain
supported by Street Dream derivatives, 3 Card Monte, houses of cards
and a system that couldn't fix lunch let alone the state we are all in.

I am not a defeatist and I hope we all get through it, as I suspect we
will. The reality is, however, that we tend to become "used" to the deteriorating
situ, and policies and costs, over time. The reality is there is no real changing the
system any more than learning to fly. We wrap it up in flags, sound bites and feel
good stuff and become slightly more comfortably numb to the eroding conditions.

We are the gov't, but the Gov't is no longer us.

chonko · #16 09-24-2008, 08:19 PM

When you take cops of the street because everyone has the right to live free and do whatever they want- I wonder what will happen?

Michelle · #17 09-24-2008, 08:20 PM

pRon

Eric5273 · #18 09-24-2008, 08:45 PM

Quote:

Originally Posted by motordavid

The reality is there is no real changing the system any more than learning to fly. We wrap it up in flags, sound bites and feel good stuff and become slightly more comfortably numb to the eroding conditions.

We are the gov't, but the Gov't is not us.

Interesting comment here. Some would compare our current economic situation (failing banks, huge national debt, inflation) to that of the 1920s Weimar Republic. We all know how that one turned out.

The problem with falling into a deep recession (or even depression) is that people are suckers for that word "change". And of course we are seeing that in our current election cycle. It's clear that we need change, but are the changes being proposed going to make things better?

Quicksilver · #19 09-24-2008, 10:03 PM

I find it interesting that no one is really talking about the root cause of this financial problem we have. The flat out morally repugnant behaviour
demonstrated by those who decided to throw caution and their fellow man to the wind.

It is quite evident that If we cared about people more than we cared about money, we would not be having this problem or this discussion on this level today.

A lot of people have built their personal financial foundation on deceit and lies. They lied about their income and bought a home that they couldn't afford. … They spent money like it was going out of style and the banks we’re just as greedy encouraging loan officers to write loans they knew people couldn’t afford.

The lack of regulations meant that corporations were no longer in check which means they we’re free to do what people do. Rip off other people. In turn they then sold what they knew were bad loans to other corporations to make a profit. Other low life corporations continued this dishonest practice by buying packaged loans they knew were no good until it finally caught up with them and everyone working for the financial system contributed to the ruse.

The answer to all of this may well be what no one is willing to do. Return the entire system to a system of integrity and honesty.

If people had any integrity they wouldn’t try to cheat and lie just to get ahead only to find themselves living a lie that in the end will bring nothing but financial and personal destruction to not only themselves but others as well.

But I doubt that anyone would ever suggest the do it right option because the concept of honesty and moral integrity is a concept that is foreign to people in general. No longer is a good character and honor a part of the fabric of the society we live in.

Yes I know that many of you will say but but people are basically good aren't they? Oh sure they are. It’s those same people who innocently went in to the bank lied about their income and bought a home that they couldn't afford. The same people who charged up their credit cards knowing full well they couldn’t pay the bill. It’s those same honest people who worked for companies that wrote loans they knew people could not afford. It’s those same people…… well I believe you get the picture.

Let’s be real folks. We know what this is. It’s moral degradation from the top all the way down to Joe six pack fed by greed, corruption, dishonesty and all the other immoral vices that contribute to this and so many other ill’s we suffer from.

Now people are looking for a way out. But please do any of us honestly believe that self serving politicians will honestly come up with a plan that in the end will serve the people? Not until they find themselves digging thru the same garbage can with the rest of us.

The government is run by people who believe it’s ok to be caught in a mindless cesspool of spending on a war that no one wants and on programs that benefit no one but misses the boat entirely when it comes to serving it’s people with compassion.

The answer is so simple that I am amazed that people can’t see it.

“DO THE RIGHT THING”. You know what it is. If you don’t know then for Gods sake have the humility to ask someone.

Stop making excuses and dredging up personal ditches to hide in.
Stand up, Don’t let people off the hook ignoring them while they stand by and steal your good life. Show some character and honor and hold the line.

”DO THE RIGHT THING AND DEMAND THAT OTHERS DO SO AS WELL”

vinuneuro · #20 09-24-2008, 11:43 PM

Amazing that greed and innovation, what makes our economy so good, almost led to our economy's collapse. The root of the problem is/was very poor risk management (in leverage and credit looseness) on the part of so many commercial and investment banks.

Anyone who really wants to understand the mess should read up on securitization, mortgage backed securities and credit debt obligations.

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