Monday, November 26, 2007

Risky business

There is no home mortgage crisis -just prodigality. A family should expect foreclosure if it engages in over-spending and over-reaching. Amen. A consumer accustomed to funding life’s little extras - from big-screen TV’s to a Caribbean vacation - by borrowing against his home’s value ought to repent. A single mother purchasing a home for $385,000 on a $34,000 salary by taking out a first and second mortgage, buying it with no money down out to see her behavior as shameful. Buying only what you can afford or foregoing a purchase that is unrealistic in today’s economic climate can be downright humiliating when the opposite is being justified by our ‘you deserve itl’ culture. It may be un-American not to have the dream but it should be American to afford it. Really! Waste-thrift is still dissipation. An attitude of ‘hang the expense,’ is still greed. Wanting it all, having it all is not a right or right.

One third of households pulled equity from their homes in the last several years with the result that they have a collective saving rate of a negative 10%. Ignorance of math or percentages will never excuse narcissism. A forced cutback from both turkey and lasagna at Christmas to one entree should tell those who revel in decorating for holidays and pursue luxuries to re-examine their lifestyles and re-define what’s affordable. Shoppers use the excuse that they are victims to stores who work overtime to lure shoppers with earlier promotions and no interest payments. What happened to self-control? Lenders who should know better than to finance risky loans. Common sense was missing when bankers and realtors made such wacky loans. How much government policy insisted that these high risk loans be made to un-creditworthy borrowers in the name of equality? If an institution that intends to lose money should not be in business. Irresponsible spenders deserve to reward themselves with a Christmas of gifts from the local dollar store. The tragedy, unfortunately, is that unfettered consumption and entitlement are justified by many Americans, politicians and lending institutions. Sympathy for profligates should be replaced with counseling for them (and good old-fashioned guilt) do what’s right rather than what’s possible in this country today. Those who don’t splurge unless they can afford it, those who don’t overindulge at the dinner table or at the trough of materialism don’t file for bankruptcy. Nor do they re-finance the 7th, 9th and 10th commandments.


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