The Great American Greed

I recently read a post on Portfolio.com where they put together a March Madness style bracket asking, "Who Killed the Economy?" The usual cast of characters were there, President Bush, Alan Greenspan, OPEC, hedge funds, etc... In the bracket the liberal readers have blamed the economic collapse on President Bush. Being that he is the person in charge I understand why people are quick to blame Bush but lets really take a look at whats going on because playing the blame game is going to lead to a waste of more taxpayer dollars on things like Grand Juries and investigations that will lead to nothing but a slap on the wrist.

First we have to look at the Greed of Americans, yes that is right you and me. Our greediness caused us to look past the obvious slow down and ask is what I am doing moral? No we didn't and why? To pay the mortgage, all three of them. You see the banks were handing out loans left and right to people who did not qualify under traditional lending measures. Which means people who couldn't afford to buy a home were getting loans. We can thank the Community Reinvestment Act for that. I won't get into the specifics because it again is playing the blame game but we must learn and then not make the mistake again.

We have seen a paradigm shift in these United States. People are no longer savers and have started building up large wads of debt. They are falling prey to the advertising they see on television, internet and in print. People would rather have it now instead of saving up and paying cash for merchandise. I can remember when I was 16 my dad taught me a valuable lesson, that at times I have chosen to ignore. He encouraged me to save my money up and buy my first car with cash. My first car was $1000 and it took me six months to save that much money. It was 1993 and I bought a 1985 Ford Escort.

When is the last time you saw someone pay cash for a car? I would estimate that 90% of all new cars sold are financed. I would also estimate that people flip flop from car to car these days every three years. That reminds me of our family car growing up, that is right one car. My dad and stepmother bought a 1989 Mercury Topaz and they kept it for ten years. In my driving life I have had 8 different cars. I have financed all but two of those and I have paid off 2 of the 6 that I have financed. Yes I know what you are saying, do what I say not what I do but I recently was awakened to this.

There was a time when people paid cash for homes. There was also a time when home equity loans were illegal. That is another problem people are using their homes like ATM machines. Instead of saving up cash to pay for a renovation they are instead appraising their home and cashing in on the equity.

So what happens when home prices sky rocket in a matter of 5 years to unprecedented levels and then drop all of a sudden. Well people are paying for an asset that is worth more then what they paid for it and now they cannot refinance because a bank will not give them enough money for the house. People are walking away from their homes and then buying them at auction for a thousands of dollars less then what the original loan was for. This is dishonest and I refuse to do business with anyone who does this. In fact I had a business owner in New Jersey who applied for a lease for some equipment for a dry cleaning business he was starting. He said he wasn't going to pay for his home again until the government fixed the housing crisis and the bank wasn't going to foreclose because they could not sell the home. I was disgusted. I told the man that not only is that dishonest but I doubt anyone will lend you money again. The sad thing is that someone probably will.

So what is my point? My point in this rant is that we do not control what Bush does, we do not control what CONgress does nor do we control what banks do, at least not directly. We do control how we buy. We would not be in this financial mess if our greed did not get in the way. American's wake up! Stop buying things on credit. Live within your means. Stop buying CRAP. Save your money and pay cash for things. If you cannot pay cash then you don't need it.

Bush's Tax Rebate - What to do what to do!

So have you heard? Bush and congress are going to give us some of our money back. Some of us will get it and some of us will not. More than likely the people that make more than 110K a year won't and people who do not pay taxes also will not get a check. Also this check is more like a loan and you will be required to report it as income on the 2009 taxes.

So what is going to happen is you will likely receive a check for 500 to 800 dollars. The government is hoping that by interjecting billions of dollars into consumers pockets is that they will spend it. So that of course brings up the question; What to do with this money? Well in the tradition of the internet and blogs here are a few suggestions in the form of a top ten list except the order will be provided by you the reader and the ranking will change as you vote! So here goes:

1. Pay off credit card debt - YAWN, boring whats next....

2. Buy that PS3 you have been waiting to buy so you can get the best system - A sure hit with gamers.

3. Take a vacation - You know actually get some sun on your pale posterior!

4. Put 800 on the Giants to win the Superbowl - I am in no way advocating gambling...err wait a second yes I am.

5. Upgrade your 20 year old CRT tube, analog TV to this jewel for a little more than $800


6. Get a new wardrobe - This will be popular with women I am sure but some of you guys out there should consider this option also because your Teenage Mutant Ninja Turtles t-shirt is starting to smell.

7. Invest for your future - Well if you think you are going to make it to retirement then go ahead and hedge your bets by investing this money. Now on what is up to you, no free investing advice sorry.

8. Lend your money - The innovative people at prosper.com and other P2P lending sights have created a way for you to become an instant loan shark. Make anywhere from 7% all the way to 28% and no Guidos needed they do all the collecting.

9. Give it to charity - no not the Charity down at the local Bada Bing club, the charity of your choice. If you are in a place right now where you do not need the money then give it to your church or your favorite save the rain forest organization.

10. Contribute to your lack of brain cells - Go out and have a good time on Bush or with or whatever. Buy some America's #1 cash crop or import your good time from Mexico. Or if you just want to partake in the norm and go out and get sloshed. Organize a get trashed on Bush bar hopping event.


Trust me I am sure I will get comments about how I should have included this or that on the list so if you have a good one then please comment. Oh yeah it you want to contribute your $800 bucks to a lowly blogger then that is ok too.