Government Mismanagement

The quasi-governmental Fannie Mae and Freddie Mac were taken over by the Federal Government in an attempt to stop the bleeding in this major mortgage mess.

Following congress' strong desire to make home ownership more accessible to citizens, they actually created the monster that has so damaged the financial markets through massive mortgage defaults.

In an age of 100% home loans routinely made for borrowers that clearly had no ability to pay, congress has little right to point fingers at irresponsible lenders. They and their politically-appointed cronies at those government created monsters are at least equally to blame with the lenders and borrowers that simply took advantage.

I was thinking about my grandparents' generation. They lived through the Great Depression, and their remarkable frugality was often puzzling to me. Here were people who had, at least from my young perspective, plenty of cash and no debt. Yet they drove old cars, made sure no lights were on unnecessarily, were careful with their grocery budget, and would never consider buying luxury items.

We seem to have forgotten those lessons. The people and their government spend recklessly, don't save, and borrow as much as a lender will allow. So many people, including those making decent salaries, are leveraged so badly that if there is any lapse in income, they will face immediate bankruptcy.

Working with employers and seeing data on their employee's 401K retirement funds, I've been shocked at the high number of people who raid their retirement for more spending money. Many people participate to get the employer match, then take the maximum allowable loans so they can spend the money. For those people, there's no retirement nest egg, but a debt that must be repaid or they'll be faced with penalties and interest.

The government is no different. They spend way beyond their tax collections and borrow the difference. Now we have a federal budget that has to spend a significant amount of tax collections on debt service. Republicans were supposed to be the fiscally responsible party, but when they got control of congress, they somehow forgot. Democrats make no pretense of fiscal responsibility, but promise to raise taxes to cover their planned massive spending increases.

It seems our entire country is on the verge of bankruptcy, and there's nobody even close to doing anything to stop it.