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Sunday, Nov 8, 2009
One thing is very different than the years before and after the Great Depression... Credit cards, smaller down payments living beyond your means.
I guess I was pretty lucky I was born just after WW2 ended. My parents were born in the early 1900s, to immigrant parents who became landowners had made it to the middle class. They enjoyed their parents wealth in the 1920s as they came of age. Married in 1929, bought some land and had their first 3 children as the great depression hit. My parents had gone through the Great Depression and the war shortages with my 5 older brothers and sisters. Yet by the end of WW 2 my father had bought back the farm he lost during the depression, had paid for it, and was remodeling the house. He put away money for all 6 of is children to attend college and helped then get started in life, slicked his money in CDs for retirement.
At the same time he thought us the merits of not buying anything until we could afford it. My parents never bought a car until he had the cash to pay for it. They had credit cards at local businesses, but paid them off every month. Yet we lived a middle class life. We had nice clothes, cars to drive.
I learned from my parents and carried it not my adult life. They taught us the concept of sacrifice. I did of course get a credits cards, but keep them with in my means to pay. I sacrificed vacations and personal wants so I cold pay for my children's college and leave them debt free. When my husband and I bought our first house, we had to make a 20-30% down payment, and have the income to pay the morrtgage. Even though we both had careers, welike most people, bought and based monthly payments or rents bing less than 25% of of monthly income on one person.
This is what is different from today. Young people don't make sacrifices and wait until they can afford something... They have an enormous credit card debt and little equity in their houses. Instead of cutting back they just use their charge cards to get by. The U.S not only has an enormous deficit, it's citizen's have an enormous personal debt.
The whole idea of encouraging people to consume is not only bad for our economy it's bad for he environment. In addition to this current financial crisis in 3 years me and a lot of other baby boomers will hit the Medicare system, and social security. No one cam possibly live on SS alone, as you need SS to pay for Medicare as it is not totally free. Besides the financial crisis today, The U.S may have a health and crisis coming in the next 10 years. It may just be that things will go back to life in the 40s and 50s... grand parents living with their children or vice versa.
People need to stop writing articles such as these. This country is not going in a depression and not even in a recession. A majority of the problems are related to the bad housing market. All of the forclosures are because of the irresponsible/sleazy mortgage companies and their 3 & 5 year ARM's that were not explained to people properly and were handed out to people that could not afford them after the 3 or 5 years were up. All that these types of articles do is scare people and convince them that this country is in some kind of unstoppable, downward spiral and it is not. The housing market will come back in a year or two. It's just a cylce. There is no need to panic and go sell all of your stocks like everyone is doing for no reason. As far as I'm concerned this country is doing quite fine. If you want to see an area that's doing bad and needs real help, come to Michigan.
Big business took us by the balls and emasculated the middle class and poor of America. NAFTA, GATT, the WTO, the federal reserve, the dummied down populace, and our complicit government have left us behind as a 3rd world nation.
It's too late for this or any forseeable generation to recover from the rape of our economy. As McBush said to the auto workers, you're jobs will not come back (they are now in foreign countries). All the printing of all the phony money will not stop the hemorrhage...the rest of the world no longer respects the dollar.
It's over America, forget it!
To whom it may concern,
I just read the article on the "great depression: the sequel," and I have to say that even though it may seem like we are in gear to go to a depression, we aren't. What's happening right now is probably the best thing for the economy and I will tell you why.
I live in the DC Metropolitan area and I can tell you that the housing market went crazy here since 2002. 1 year you are buying a SFH for $200K and the next year you are paying $500K for the same house, while our salaries did not match the market and that is the problem we are having. Once the housing market finishes with this huge hit, the economy will bounce back significantly because people will have more money to spend on other goods, like TV's, cars, etc., which replinishes jobs and stabalizes the stock market. The downfalls of this are, banks get smacked and people's credit gets hit hard due to foreclosure or short sales, but unemployment goes down because people are spending more money which creates more jobs and in the long run this will help the economy out. We only have a 4.5% unemployment rate and companies are still hiring. Maybe the banks will think twice before offering ARM's that allow people to buy an $800K home which they can afford for 1 to 5 years, but need 4 jobs in order to pay for it afterwards, hence the foreclosure's and housing hit.
It is articles like this that has everyone freaking out about a depression because the simple phrase "depression" has people hermitted in their homes afraid to spend money and in turn hurts businesses that are relying on these very same people to go out and buy items from them.
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