These past few weeks we’ve witnessed a collapse of credit in this country like most of us have never seen. Former Federal Reserve Chief Alan Greenspan in a recent interview called it a “once-in-50-years event.†Greenspan failed to mention that he’s partially responsible. But you know what? We all are.
Before anyone starts finger pointing and blaming someone else for the nation’s credit woes, perhaps we should follow the bouncing ball to see how this colossal collapse began. It started with us, with you and I wanting more house than we can afford each month. And mortgage lenders have been far too eager to lend us money for these high-priced homes because Wall Street kept coming up with new loan products requiring less documentation. Whether or not we could afford the loans really didn’t seem to matter.
Real estate agents have had no problem selling buyers expensive homes and taking a high commission. Appraisers got more than a little loose with appraisals and homes were overvalued. Builders seized the market opportunity and built like crazy, raised prices and made a bundle. Then Wall Street said, “Sure, we’ll buy risky loans, and we’ll buy a lot of them.†Investment banks got greedy, leveraging themselves to the hilt. Then, when investors stopped buying risky loans, those brokerage houses were left with no one to pay and bankruptcy. This, in turn, created panic in capital markets around the globe, pushing the world economy to the brink of ruin.
Now, I realize I’ve oversimplified, but here’s the point: If you want to blame someone for the economic problems we’re all suffering through, start by looking in the mirror and over at your neighbor. We’re all responsible. Now it’s time to fix it and it’s going to hit us all right in the wallet.
