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A Legacy of Greed
By Kathy Hare

          "Being of sound mind and body, and in full possession of a greedy soul, we bequeath to our children and grandchildren the following: $10.6 trillion worth of debt."

          How's that for a last will and testament!

          On September 17, CBS reporter Mark Knoller said the national debt was currently $9.6 trillion. The figure includes the $200 billion needed to shore up Fannie Mae and Freddie Mac. Then American International Group Inc, one of the world's largest privately-owned insurers, was in danger of failing; that bailout added another $85 billion to the debt. By Sept. 20, lawmakers promised they would act quickly to pass a proposed $700 billion deal to cover the bad bets made by hundreds of failing financial institutions. Federal insurance also had to be extended to money-market mutual fund accounts. Without a massive infusion of cash, retirement savings for millions of Americans were in danger of evaporating quicker than a summer thunderstorm in Colorado. But computing the total of bad debt and at-risk securities is not over yet; a "Wall Street Journal" article predicts the actual cost to taxpayers may top a trillion dollars.

          What caused this national economic crisis? GREED!

          Webster defines greed as "a desire to own more than one needs or deserves." Well, most Americans own more than we need, yet we are not all greedy. To me greed is a "got to have it all right now" mindset, and it has permeated every sector of American society. Having expensive cars, nice clothes, electronic toys, and the largest house your credit score will allow has been the American way of life for decades. However, greed reached a fevered pitch around 2004, when flipping houses became a national pastime. Housing prices climbed, and lending standards were lowered, allowing buyers to purchase homes with little or no money down. Subprime mortgages, offering 100 percent financing to buyers with low credit scores, allowed Americans who would not have been able to get a mortgage under tighter lending practices to buy into the hot real estate market.  Credit card debt climbed as buyers purchased appliances, furniture, and knick-knacks for their new abodes.

          By March 2007 foreclosure rates across the country began rising, fueled in large part by subprime borrowers. Home prices in California, Nevada, Arizona, and Florida began dropping as more "bank owned" properties entered the market. Some economists urged the public not to worry, the commercial real estate market was strong and unemployment rates were low; therefore, the economy was still "sound." The housing market would soon turn around. But we all know it didn't. The economy went from bad to worse, culminating in the largest government intervention since the Great Depression.

          Who is responsible for the financial mess this country now faces? The blame should be placed on everyone who participated in the national feeding frenzy deserving of the title "The Great Greed-A-Thon." Every mortgage lender and real estate broker who urged customers with poor credit histories to"take out that loan" made money. Individuals who willingly accepted loans they couldn't afford share in the blame too. Credit card companies also made billions by offering low interest rates, only to ratchet-up the rates a few months later. Yet no one forces consumers to buy more than they can afford, so the blame for indebting our childrens' and grandchildrens' futures clearly belongs to the American public.

          On top of all the current bad economic news, Mark Zandi, chief economist for Moody's Economy.com, said foreclosure rates "will remain very, very high well into 2009 and 2010." So don't be surprised when the government comes around again, hat-in-hand, asking, "Buddy, can spare another trillion?"

          Remember when a young couple would scrimp and save to buy their first "fixer-upper?" Sometime in the 1990's I began hearing people in their late 20's and early 30's say, "We don't want to buy a used home." The idea of putting some sweat equity into a house before moving-up to your dream home became passé. Now the way to go is to buy a new home with little or no money down. Hundreds of mortgage lenders encouraged this behavior, and numerous "get rich quick" scam artists got wealthy selling books telling everyone how they too could corner the real estate market.

          Going back further in time, debt ridden families used to be called "dead beats." Now the politically correct term is "failed investors." Yes, I know I'm a fossil, but I've often wondered what happened to the shame once connected with declaring bankruptcy. It's gone, right along with the wealth of future generations.

          Paying off the greed-generated national debt in our lifetime is impossible, but it's time to make sure the legacy we are leaving our descendents doesn't get any worse. "We the People," should demand a return to sound banking practices. The first step would be a rule that puts an end to adjustable-rate mortgages and subprime loans. Demand a return to those "thrilling days of yesteryear," when a home was purchased by buyers with a good credit rating and a 20 percent down payment.

          Cut the credit card companies' fraudulent lending practices off at the knees. Higher interest rates and late fees do not apply to consumers who pay the total balance due each month.

          I have my own economic prediction. No amount of taxpayer dollars will create a stable economy until the majority of Americans start practicing some common sense economic principles. Always think twice before taking advice from mortgage brokers or financial advisors, whose salary is generated by your indebtedness. And most importantly, stop buying things you can't afford!

          We owe at least that much to future generations, because right now all we have to offer them is a legacy of greed.

First published in The New Falcon Herald
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