Private greed and the economic crisis, part 4-the little man (or woman)

We´ve said quite a bit over the past several months about the greed of banks, other large corporations, government, and the like.  But we have to admit that ordinary individuals have also contributed to the crisis by wanting more and more and more...by being greedy.

I´m referring here to people who took out huge loans backed by little or nothing in order to raise their lifestyle, when they already had plenty enough to eat, had a good roof over their heads, and had the possibility of taking an annual vacation.  I´m referring primarily to middle-class people who wanted three cars in the garage, or a nice boat, or a condo in some great vacation spot, or a major re-model of their house, etc., etc.--when in fact they didn´t have the income to afford it.

Instead of income, they relied on credit...LOTS and LOTS of credit.  Credit that they had expected to pay back when the housing market shot through the roof.  But...

Mostly unregulated credit, and unrealistic housing expectations, that helped drive up the price of houses to the point where very few people could any longer afford to buy.  Credit which was underwritten by, well, by...nothing, or close to it.

Credit which led to the bursting of the bubble.

I seriously do believe these people were a major cause in the bursting of the economic bubble.  I do NOT, however, think that they are the most responsible.  A too-optimistic individual almost never has as much control or responsibility as a corporation which makes it its business to be financially sophisticated and savvy, which is willing to cut corners and in some cases, engage in significant fraud, for reasons of personal or corporate benefit.

NOTE:  As a further illustration, I meant to shoot a photo of a home with a garage fitted out for 3 cars, but left California before doing so! Uh oh.

But it remains true that if the private, middle-class individual had not been willing to contract for so much debt, if the "me" factor hadn´t been so important, if people were more willing to be content with what they had or what they could in fact pay for out of their own pockets, then they wouldn´t have been such easy prey for the blandishments of those financial institutions and others who were not operating in a manner so as to benefit the public good.

Which makes it clear that I believe in the public good more than private acquisition, and in savings more than loans.  We all have our preferences.

OUR NEXT POST will be about our screening on Jan. 26 in California.