Financial Fiasco

What I remember most vividly from my required economics 101 course in college has nothing to do with economics.  It was my classmate's reaction - utter astonishment - that I was happy about being pregnant.  She assumed I, like her, was a 19 year old unattached freshman, so my joy at being a 28 year old married  pregnant college student already mom to a 2 year old was as incomprehensible to her as economic theories are to me.  I passed the course with decent grades, but retention of material?  I remember the individual diapers more than I remember that information, perhaps because what ended up in the diapers smells less odious than what happens with economics.  So as we teeter on this tottering financial mess, I'm feeling that deep disquiet of uncertainty.  How worried should I be?  I personally have been not only responsible in my financial matters, but fiscally conservative, too (fiber purchases don't count - hey, quit laughing - really, they aren't part of my household finances).  My mortgage is not subprime.  I pay my bills.  I don't have a gazillion credit cards, just 2, one which is paid in full every month, one which has a very small balance so I keep getting all the extra coupons and other discounts.  Does that outweigh the interest accrual?  I dunno, I majored in English, not math. I also have real equity in my house, even in this time of collapsing housing prices. 

How did I get to this financially comfortable situation?  When I started life on my own, getting that first credit card was really hard.  Getting my first car loan independent of anyone else was difficult.  I had to open a credit union account because I had no established credit.  No bad credit, just no credit record.  I had to take tiny little baby steps to prove I could handle credit responsibly.  It became habit.  How long has it been since just barely adult people started getting handed credit cards and loans on silver platters?   Those quick and easy credit offers started while my children were small.  As my children grew into the economy, they became not individuals but objects of financial speculation.  Prey objects, actually, in the financial world.   How do these baby adults learn to deal responsibly with credit when it is so freely gifted?  Clearly, many don't. 

And WTF is the definition of usury anymore?  Predatory practices in the financial industry promised this collapse.  US Representative Jim Marshall (D, Georgia) wrote a commentary for CNN about why he voted for the bailout, even if it will cost him his seat in Congress.  He describes the panic effect: "When credit is quickly withdrawn, everyone in the business of lending panics. Credit becomes scarce and is not available at a reasonable interest rate."  Reasonable?  Interest rates for most people have not been reasonable in a very long time.  Legally, it's only usury if the rate exceeds that set by law.  But ethically?  Minimum payments should reduce the debt.  Yes, it's that simple.  If the interest rate prevents that, it's not a reasonable rate. 

Should that bailout bill have passed?  Marshall's argument for it - "Although the bill was imperfect and wildly unpopular, I believed that those of us in Congress needed to suck it up, vote for it and let the chips fall where they may" - is not entirely reassuring.  I guess the idea is any bailout, even imperfect and wildly unpopular, will quell the panic much like a tranquilizing drug.  But remember, drugs have unintended side effects which can be worse than the original affliction.  Perhaps handing out paper bags and leading deep breathing sessions on Wall Street would be more effective.  Or teaching them all how to knit or spin. 

I don't have answers.  I'm not sure anyone does, hence the unease we're all feeling.  I do think it's clear that putting everything in terms of big business and profit while sacrificing the individual is not in our national interest.  We were a much nicer country when we had a mom and pop culture.

Comments

[Daniel]

Mccain is in Iowa right now, holding an economic roundtable. Is his campaign still in "suspension?" If it is, then I suggest he gets his ass back to Warshington and debate with other Congressional leaders who are NOT JEWISH! If he wants us to believe that this is NOT a political stunt, then he has to convince the people that he IS concerned about us and our economy.

[Anne]

Sigh.

Ask me how much the economy sucks - we have a potential buyer who is paralyzed with fear and cannot move forward to just SIGN THE DAMN CONTRACT ALREADY. They need to "wait and see" how things will turn out.

I'd like to do my part by selling and buying a house in the next month. Purely self-sacrificing to shore up the economy, mind you.

[Laurie]

I just can't believe what is happening. Personal responsibility doesn't seem to exist. Intelligence has gone out the window. Lenders suck the blood of the stupid and ignorant. I was raised as you were. I'm livid that my tax dollars are going to solve a problem that should never have happened in the first place.

[diane]

DITO!

[Heide]

I wish that those in Washington (DC) would exhibit even half of the common sense approach you described in your dealings with finances and responsibility. This mess that we're in didn't happen overnight... makes me wonder just how far up their arses the politicians' heads have been to not see this coming.