Bonnie Alba
The road to Rome - - tighten your belts
By Bonnie Alba
"In my view, it's time to learn from history and take steps to ensure the American Republic is the first to stand the test of time." — U.S. Comptroller David Walker
Mr. Walker has taken the unpopular position of doing his job and prophesizing the future we face within 50 years if all federal government policies continue to support the "status quo" of building on the sands of overspending and debt.
Present Crisis
Over the last ten years, we have seen home construction across the country increase in a frenzy while home prices rose almost daily. Buyers waited in crowds at agent's doors for hours to snap up new houses at amplified prices. Home prices increased to such heights that people were buying and selling just to make a profit.
Many Americans did not realize the high risk of taking on the debt load of two mortgages. Even qualified buyers are now suffering with the interest rate rising on their adjustable-rate mortgages. At the time it seemed like a great idea. To help them with their home purchase, mortgage companies came up with "creative" financing: "Oh, we can arrange two separate loans, one with a nice interest rate, the other with an interest rate a little higher." Propelled and prodded, wanting a new home bad enough, Americans thought they could do it.
The example of West Camille Street in Santa Ana, California: Homeowners have recently been devastated by the decrease in home values and not being able to keep up their mortgage payments. Mostly hispanic families, not stupid, just ignorant, they bought homes in the hope of living the American Dream.
In the latest and ongoing crisis which is the direct consequence of our exuberant overreach in thinking real estate prices could continue to rise and never fall or readjust, along with the sub-prime mortgages, lending companies face their own fallacies and mistakes.
More "pretend" Money
There are several reports afloat in financial news that the Bank of Japan, the European Central Bank, the Bank of Canada and the Fed have risen to the housing-market crisis by infusing up to $260 billion into the system to calm the markets. Where did all this liquid money come from? For our part, the Fed printed at least $38 billion for the liquid infusion. Keeping the capitalistic economy going even if they have to print "pretend" money out of thin air continues to be the Fed's answer for all crises.
So, Wall Street and the country will breathe a little easier for a "short" time — until the next crisis. And there is sure to be one.
At the same time, we must also realize, as Mr. Walker reported last year, the American people spent more than they took home during 2005 and 2006. Not seen since 1933 when the Great Depression was occurring. Are you prepared for the crisis this will eventually cause?
The whole of our economy has been encouraged to believe dependency on debt is the way to keep us strong. American citizens are carrying a debt load to the tune of around $2 trillion while the whole national debt is out of control varying from $40 trillion to $80 trillion, depending on whose figures you read.
Mr. Walker paints word pictures of "striking similarities" between American's current situation and the factors that led to the destruction of the historic Roman Republic. Besides the overall distorted policies of our government, other factors he names: "declining moral values and political civility at home, an overconfident and overextended military in foreign lands and fiscal irresponsibility by the central government."
Meanwhile foreclosures continue to grow. Good Americans will lose their homes because they were ignorant of the riskiness of buying a home at inflated prices, well beyond what they could afford.
Will we as a people and as a nation continue accepting that it's okay to be "hooked on debt" and follow Rome right into a tomb of our own foolishness? Do we need to listen to those who say "Debt is Good" because it satisfies our instantaneous wants and desires? We must all answer the same question, both individuals and our government.
"We the people" must accept the responsibility for allowing our government and elected officials to continue this "status quo" of spending beyond our means.
Are we willing to say, "okay, this may mean living within my means, which means a little less luxury for the sake of my children and grandchildren?"
We can avoid this destructive road to America's ultimate fall, both citizens and government. Tighten your Belts for the bumpy ride to come.
© Bonnie Alba
"In my view, it's time to learn from history and take steps to ensure the American Republic is the first to stand the test of time." — U.S. Comptroller David Walker
Mr. Walker has taken the unpopular position of doing his job and prophesizing the future we face within 50 years if all federal government policies continue to support the "status quo" of building on the sands of overspending and debt.
Present Crisis
Over the last ten years, we have seen home construction across the country increase in a frenzy while home prices rose almost daily. Buyers waited in crowds at agent's doors for hours to snap up new houses at amplified prices. Home prices increased to such heights that people were buying and selling just to make a profit.
Many Americans did not realize the high risk of taking on the debt load of two mortgages. Even qualified buyers are now suffering with the interest rate rising on their adjustable-rate mortgages. At the time it seemed like a great idea. To help them with their home purchase, mortgage companies came up with "creative" financing: "Oh, we can arrange two separate loans, one with a nice interest rate, the other with an interest rate a little higher." Propelled and prodded, wanting a new home bad enough, Americans thought they could do it.
The example of West Camille Street in Santa Ana, California: Homeowners have recently been devastated by the decrease in home values and not being able to keep up their mortgage payments. Mostly hispanic families, not stupid, just ignorant, they bought homes in the hope of living the American Dream.
In the latest and ongoing crisis which is the direct consequence of our exuberant overreach in thinking real estate prices could continue to rise and never fall or readjust, along with the sub-prime mortgages, lending companies face their own fallacies and mistakes.
More "pretend" Money
There are several reports afloat in financial news that the Bank of Japan, the European Central Bank, the Bank of Canada and the Fed have risen to the housing-market crisis by infusing up to $260 billion into the system to calm the markets. Where did all this liquid money come from? For our part, the Fed printed at least $38 billion for the liquid infusion. Keeping the capitalistic economy going even if they have to print "pretend" money out of thin air continues to be the Fed's answer for all crises.
So, Wall Street and the country will breathe a little easier for a "short" time — until the next crisis. And there is sure to be one.
At the same time, we must also realize, as Mr. Walker reported last year, the American people spent more than they took home during 2005 and 2006. Not seen since 1933 when the Great Depression was occurring. Are you prepared for the crisis this will eventually cause?
The whole of our economy has been encouraged to believe dependency on debt is the way to keep us strong. American citizens are carrying a debt load to the tune of around $2 trillion while the whole national debt is out of control varying from $40 trillion to $80 trillion, depending on whose figures you read.
Mr. Walker paints word pictures of "striking similarities" between American's current situation and the factors that led to the destruction of the historic Roman Republic. Besides the overall distorted policies of our government, other factors he names: "declining moral values and political civility at home, an overconfident and overextended military in foreign lands and fiscal irresponsibility by the central government."
Meanwhile foreclosures continue to grow. Good Americans will lose their homes because they were ignorant of the riskiness of buying a home at inflated prices, well beyond what they could afford.
Will we as a people and as a nation continue accepting that it's okay to be "hooked on debt" and follow Rome right into a tomb of our own foolishness? Do we need to listen to those who say "Debt is Good" because it satisfies our instantaneous wants and desires? We must all answer the same question, both individuals and our government.
"We the people" must accept the responsibility for allowing our government and elected officials to continue this "status quo" of spending beyond our means.
Are we willing to say, "okay, this may mean living within my means, which means a little less luxury for the sake of my children and grandchildren?"
We can avoid this destructive road to America's ultimate fall, both citizens and government. Tighten your Belts for the bumpy ride to come.
© Bonnie Alba
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