In Bill Moyers Journal this week he discussed the roots of our current economic problems in an article titled "Sharing the Blame for the Economic Crisis."
Bill Black a former regulator believes that the blame for our current economic crisis lies in the hand of the lender.The lenders didn't verify that the borrowers had a jobs and was able to repay the debt. A loan that is given to a borrower without verifying their financial situation is called a "Liars Loan."
When a borrower goes into a bank for a loan, they are ask about their current job and what their assets are. If a bank gives the loan without verifying the information they are giving a "Liars Loan." Is it fraudulent to give a Loan without the verification process? According to article it is, "it produces enormous fraud under economic theory, criminology theory, and 2000 years of life experience.”
Americans have lived above their means for many years now. The current economic crisis is proof of that. At the end of 2008 Americans began to save more and spend less. The article credited "Household debt in the U.S. the money we owe as individuals — zoomed to more than 130% of income in 2007, up from about 60% in 1982. We enjoyed living beyond our means no wonder we wanted to believe it would never end.”
It believe this article to be very true. When I go to the bank for a loan, they never do a credit check, because I have been banking there for years.We all have a tendency to live above our means. As my mother would say "people are trying to keep up with the Joneses."
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I don't try to keep up with anyone. With soaring food costs, rising heating bills, gasoline prices through the roof every summer, no health insurance, accumulating student loans, etc, it is all I can do to feed my family, keep a vehicle on the road, & hopefully pay my taxes at the end of the year.
ReplyDeleteI think this is spot on. Irresponsible lending is a huge problem, and a lot of the blame for the financial crisis lies with banks who loan money to people who can't afford to pay them back. I am glad that Bill Moyer points out that some of the responsibility lies with the borrower for borrowing more money than they can pay back. As a society, we like to shift the blame away from ourselves, but the American people need to realize that the practice of borrowing money in order to live beyond our means hurts our economy.
ReplyDeleteThis is a great blog! We have all been living way above our means for years and things are catching up to us now. We can blame anyone, but we need to start with ourselves. We created this monster and now have to live with it.
ReplyDeleteI agree with this for the most part. I don't believe everyone is, because there is still a huge portion of America in poverty. But I know my family, including myself, tends to live above our means. My grandpaw always said, if you can't pay for it with cash, then you probably don't need it. Which is true on so many levels. I think the government has been acting very irresponsible to be giving all this money out when we dont have the money to back it up. What kind of debt are we leaving to the generations after us? More than that, what is going to be left for my generation?
ReplyDeleteThis is really good. I agree with the majority of it as well. Our government needs to do something soon or all generations will suffer.
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