Bailout

No, I’m not referring to jumping out of a perfectly good aircraft although that topic is certainly more appealing than the sort of bailouts happening of late.  First it was talk of the government stepping in to help defaulting homeowners who are in over their heads.  The latest occurrence happened over the weekend when the Fed stepped in and sprinkled enough pixie dust to keep Bear Stearns from bolting the doors on Monday only to have JP Morgan Chase magically appear and buy the troubled financial house for $2 per share, down just a tad from around its recent value of $180 per share.

Remember Humpty Dumpty?  Oh how they tried to put him back together again. 

Somewhere along the line we replaced fiscal responsibility with “the payment mentality”.   Every major purchase I have endured over the last ten years was punctuated by someone on the other side of the desk asking “What monthly payment can you afford?”  That question is so firmly burned into sales people that they still ask even when I warn them against doing so.  Several years ago while house hunting, my realtor stated that until she prequalified me for a mortgage, her firms policy forbade her from showing me any properties.  I told her broker that I would undoubtedly qualify for a much higher amount than I was willing to shell out every month.  Just recently I asked my salesman at the local Jeep dealer if they offered any zero interest financing on Wrangler models.  “Yes,” he responded.  “But nobody uses it because the payment is too high – you only get 36 months on the Wranglers because they’re so popular.”  (Now you can get 60 months – timing is everything.)  I actually had to explain to a college graduate that I could pay cash but preferred to keep the money working for me while I paid monthly on Chrysler’s tab.  “But your payment will be over $700 a month,” he protested.

My parents didn’t buy something if they couldn’t afford it.  They didn’t have credit cards until sometime in the late ’70’s and then only to establish credit.  Dad had paid cash for most everything and therefore was invisible to financial institutions.  Back then purchasing decisions were based primarily on need.  It seems that these days most buying is based on personal desires and the “buy now, pay later” model.  The sub-prime mortgage crisis is not to blame for our current economic state, although you can pitch a rather easily defended argument that many of the sharks players in that game were overcome by greed with no concern for the people they were sticking serving.  There are a large number of brokers and lenders out there that should be doing time for crimes against humanity.  The credit crunch is a grand symptom of a sickness that has spread throughout our society.  People are not only defaulting on mortgages but on loans of all types: cars, boats, vacation homes, rental properties, equity lines, and credit cards.  It seems that there is no longer any shame in declaring bankruptcy and walking away from it all.  In two short generations we have evolved from men who, when faced with the cold fact that they could not live up to their financial obligations, would rather dive from the office rooftop than admit defeat to perfectly acceptable debt consolidation and personal bankruptcy.

Loose spending.  The government does it, corporations do it, certainly society does it.  And here we are all staring at the flaming paper bag on the stoop but nobody wants to stomp out the flames because we all know what’s inside the bag.  It will get messy.  But not to worry, the government will bail us out…