The credit market has gotten the economy's panties all in a bunch thanks, in part, to the whole subprime lending fiasco. People have been yanked from their homes, many smaller banks have plunged into the financial abyss, and consumer spending, the benchmark of the American economy, has slid. In the muck of it all, Bear Stearns, founded in 1923, once one of the largest investment banking firms in the world, which was even able to survive the Great Depression, sadly has been toppled. It will now become part of JP Morgan Chase, if the deal ultimately makes it, for a measly $2 a share. As this mess continues to unfold before us, this may well be just the tip of the iceberg.
But are we really all that surprised at this? I mean, we had to have known that all this borrowing we do as a nation would eventually come back to haunt us. How long could we keep this money train going, spending money we didn't have just because money could be had on the cheap? Just because our dreams were literally up for sale, and banks were all but knocking our doors down to shove money into our hands to fulfil them? Everything from new cars to big screen TVs to luxurious, newly built homes in the latest high society neighborhoods were as easy to get as a gallon of gas or a dozen eggs. Money really did grow on trees despite what our parents had told us so many times before when we were kids. Gosh darn it, our parents had it all wrong. They had to work so hard, and look how easy it is. We had the bull by the horns, and no matter how hard our parents forewarned us the bull was going to buck we could hang on. Look Ma, no hands!
Now as we sift through the rubble we see more clearly that what we've built was done so with smoke and mirrors. The gig is up. We are seeing now that, indeed, we have to make the same sacrifices our parents once did in order to achieve the same results. We're beginning to understand that success and all the goodies that go along with it comes from the hard work we endure to create it. Our parents weren't wrong after all, and no, money really doesn't grow on trees.
Look, I'll admit that sometimes bringing home my paycheck is sort of like fishing all day and coming home with a tiny fish in the bucket and telling my wife, "Honey, I've caught us some dinner." It's almost embarrassing. It's a very little fish in an even bigger bucket of hopes. The darn thing won't go very far at the dinner table, and surely it doesn't compensate for the time spent catching it. But at the end of the day it's what you have to eat. If you keep on fishing, eventually you'll get a bigger fish.
But the subprime lending fiasco just may be what the doctor ordered. From it, we are forced to look at credit in a different way and we'll now have to adjust and reevaluate our priorities. We can bet that good things come to those who wait is an adage that still bears some truth. For once the "now" generation may just get that.
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2 comments:
I agree that many Americans have tried to take a shortcut to prosperity.
Yet I think it's important to realize the difference between people who use credit for a thought out productive goal and people who use it just because they can.
There is also no small amount of responsibility that belongs to the predatory lenders and the government that failed to restrict their unethical and illogical practices.
It's actually gratifying to see some of the big sharks take a hit. Too bad the Killer Whale government keeps baling them out.
Mistakes without consequences fail to provide a learning experience.
We all have debt to some degree-at least I would think its safe to say that most of us do. I understand how credit effects me personally, and when I do make use of it I do generally feel I can responsibly decide how not to let it impact me negatively. In other words, I'm able to decide when enough is enough. I don't use credit in place of income. I only borrow what I know I can comfortably pay back.
I remember something that Richard Kiyoksaki said on The Millionaire Inside, which aired on CNBC not that long ago, about debt. He said there's two kinds. Good debt and bad debt. Good debt, by his definition, is debt that someone else pays for you. A house you rent out would be an example of this. Bad debt is debt that you have to pay for. In that example he cited a college education or a car loan as bad debt. It's just one way of looking at it all.
Having said all that, I do think that there is another side to this credit dilemna that played a strong role in the past jump for cheap cash, and that's simply that wages have been stagnant and good paying jobs are hard to come by. We've lost a ton of jobs thanks to NAFTA, and cheap Chinese labor. I mean, part of the reason credit becomes so tantalizing is because what's left after we pay our bills for the fun stuff is very little.
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