Human Greed Lies At Root Of Economic Crisis..NO TO THE BAIL OUT!

On September 23, 2008, Talk of the Nation had a very interesting discussion on the Economic Crisis. The question they posed was:

"As Fed and Treasury officials scramble to secure a $700 billion rescue for faltering financial institutions, economists are pointing fingers of blame at just about everyone: lenders, bankers and borrowers. Does greed lie at the heart of the financial meltdown? Is Main Street just as culpable as Wall Street?"

Their premise basically is that Human Greed on all levels, has caused the American Economic Meltdown. With so many people taking out refinances on their homes, seeking addition credit for home expansions, decorating and of course, all of those amazing things you "just have to have", such as, the latest and greatest car, motor home, water bike, motorcycle and don't forget all of those electrical gadgets!

It has been stated that today, Americans own less of their homes than at any time in history due to all of the home equity loans and consolidation loans that have been a common practice in our country over the past few years.

I remember growing up in Alabama, where home ownership was the most important thing. Having your own land, where you could claim as your own.... I grew up with my maternal grandparents. We lived in a upper middle class home, sitting in the middle of five acres. Next door to us, was my grandfathers Sisters home, where she lived with her husband and my great grandfather, who originally owned 100 acres around where we lived. That 100 acres had been divided time and time so that the next generations could have a piece of the family land. That dirt...meant a great deal to my grandfathers generation....and especially by great grandfathers generation. He grew up in the Great Depression...as a sugar cane farmer. He tilled the land and worked hard for all that he had and he was very proud to share that with his family.

Today, I see many people who are seeking home ownership, and find that the prices are out of reach for them. They long for that same type of comfort, of a place to call HOME. I can see why people embraced brokers and lenders, who approached them and told them that they could obtain their dreams....Some, took advantage of this opportunity to do the basics, get a home for their families....others....wanted the biggest....the best....and stretched their finance boot straps, to obtain...what they thought was, their dream. To them, it looked like a win win situation. Yes, they would be giving a lot of money to the broker in fee's, plus loan origination fee's, high interest to the banks...but they would have their DREAM....the AMERICAN DREAM.

At the time these types of loans were popping up in early 2001...the economy was booming. Most people had a good paying job, with nice benefits, energy costs were a good 30% plus less than today’s costs....why would one not be able to maintain their AMERICAN DREAM?

Then the layoffs began to hit, people who had been secure in their jobs, found that they were on shaky ground...Unemployment rates reached into the 6% range here in Oregon...and for those who were able to find a new career or a basic JOB after this...found that their pay checks were much smaller than before. It is true what economist were saying, the job markets were growing, and showed growth. But what they failed to take into consideration was that the jobs that were being created did not compensate for the ones that were dissipating. The median pay range had decreased. The comparisons that most economist used was flawed. They failed to look at the pictures as a whole...not just how many was employed, and how many new jobs were created...but what was the correlation between the pay of the newly created jobs vrs the pay of the dissipated jobs.

From 2001- to today....the average pay that American's receive, continues to downward spiral for those that are laid off...companies have to tighten their belts the same way we do when our income is less....that means for us, we buy less....for companies, they pay less and hire less.

Combine the" pay less and hire less" situation with that of an over inflated housing market...and you are set for total disaster. I have looked at the JONES down the street for awhile now...and wonder...how in the world can they afford what they have...the answer, clearly...is DEPT!

The basic reality is American's do not have enough income to support their American Dreams. Home ownership is out of reach for most. With the average home costing over $300,000 in Oregon, not many can afford the $2000 plus per month house payment.

Here in Oregon, the Median Two Income Household income threshold is $68,333, for a family of our size. That would be $15000 in annual average taxes which would bring it down to $53,333 per year. Then go ahead and break that down to monthly....$4444 per month. Now, with gas prices, the cost to go two and from work with an average commute of 15 miles one way, would come to about $1200 per month. Food for a family of 6...$1000 per month. Energy costs and other utility costs would be at least $500 per month (electric, garbage, natural gas, water, sewer, basic telephone, etc). That brings you down to $1744 per month for housing costs, car payments, credit card dept, health insurance, medical co pays, prescriptions etc.

Clearly, you can see that there would not be enough left for that type of house payment. The most you could hope for would be a house payment around $1100 per month....that would be a house in the $150,000 range. Half of what the average home goes for today.

With the greed of wall street wanting more and more profits, the greed of main street wanting the biggest and the best and the newest of everything....we have found ourselves in a quagmire.

A Economic Melt down....of epic portions.

Large companies such as AIG, Lemon Brothers, Fannie Mae and Freddie Mac....all collapsing because brokers set these loans up in a way they knew, the average home buyer could not afford, but they played both on the dream of home ownership...and the human nature response of trying to keep up with the JONES....Brokers new they would be able to sell the subprime mortgages to Freddie and Fannie....they wanted to pass of the risk...now...the risk is a reality...one that all Americans are facing.

The average American taxpayer, can not afford the colossal burden required by each household to bail out these poorly ran companies. If it is true, that the bailout is now exceeding 1 trillion dollars....that would boil down to approximately $10,000 per American household. That is clearly and undo burden, given the numbers I mentioned above.

The market is showing a regular resetting of its self. Over valued homes, over priced stocks, are balancing themselves out. We need to let the market do its job...it needs to level out on its own. That may mean some people will suffer...especially in the housing market...and I feel sorry for those who are going through this trial. But their suffering shouldn’t be carried by every tax payer in America.

Earlier today, Federal Reserve Chairman Ben Bernanke warned the financial crisis could drag the U.S. economy into a deeper downturn and urged Congress to take action on a proposed bailout package. These GOTTA ACT NOW comments from both the Fed Chairman and the Treasury Secretary Henry Paulson...speak to the human factor of rush to aid, and not scrutinize what they are asking. Chairman Bernake said today:

"The intensification of financial stress in recent weeks, which will make lenders still more cautious about extending credit to households and business, could prove a significant further drag on growth," he told the Joint Economic Committee. "The downside risks to the outlook thus remain a significant concern."

I think Rep. Mike Pence of Indiana said it best when he said:

"I must tell you, there are those in the public debate who have said that we must act now. The last time I heard that, I was on a used-car lot," said Rep. Mike Pence, R-Indiana. "The truth is, every time somebody tells you that you've got to do the deal right now, it usually means they're going to get the better part of the deal."

American deserve the "BETTER PART OF THE DEAL" on this one...we deserve the marketing adjusting itself back to reality...a reality where Americans work hard for their dreams...and can afford the basics of life...Shelter, Food, and Heat.

The American Dream is today as it always has been....That piece of dirt to call your own....Maybe now, when the market settles, more Americans will have income that can afford lower home prices...Lets urge congress to look at the root cause...lack of jobs, lack of sustainable income for the jobs we do have....and the inflated cost of the housing market. These people on wall street do not need our help...especially given the fact that Lemon Brothers gave their chief executive officer at $64.7 million BONUS last year....that above his own salary...you can not tell me he deserved that type of bonus for encouraging greed among brokers and the ultimate down fall of the U.S. Economy....

Please speak up ....let your voice be heard...call your Senator and Congressman...Let them know you do not support the bail out!

AND TO SENATORS MCCAIN AND OBAMA….IF YOU WANT MY VOTE…SHOW ME YOU CAN FIX THE ECONOMY AND PROVIDE MORE JOBS FOR AMERICANS….THAT'S WHATS IMPORTANT TO ME!