"Enough" Needs to Become Part of our Culture Again.

http://www.breitbart.com/article.php?id=D958II200&show_article=1

The following excerpt is pulled from the article hotlinked above:

"Boy, it really looks ugly for the start of 2009," said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service.

"It's really difficult to find something between now and inauguration time that says people are going to feel better, they're going to drive more, they're going to ship more packages," Kloza said.

What Mr. Kloza was referring to is price of oil on December 22nd, which closed at about $38.00 per barrel.

I had a very good friend by the name of Monty King who expressed one of the most profound aphorisms I have ever heard. We were talking about how perverted the use of the 1st Amendment of the US Constitution had become. Specifically, we use it to silence Political dissent but we use it to defend people spraying graffiti on other people's property or to publish smut. What he said was "Glen, we are killing ourselves with our liberty." Wow.

What he said is just as applicable here. Just read what Mr. Kloza said: "... going to feel better, they're going to drive more, and they're going to ship more packages...". What he is saying is that he wants Americans spending more of their money. What he is lamenting is that Americans are no longer exercising their freedom to spend borrowed money. We've been doing that for over four decades now. And right now, the American people and/or American lending institutions are speaking loud and clear by keeping their wallets closed.

Here's a stat: According this CCN/Money article, American consumer debt fell .08% in the third quarter of 2008. A large part of this was due to home foreclosures. It also is the result of jobs being lost in a shrinking economy. While people losing homes and jobs is never pleasant to consider or worse, to endure, we need to really think about what this means.

1. Americans and their Government have been spending like drunken sailors for over four decades. American household savings are at their lowest in the last century. Instead, we've been buying new cars and flat-panel tvs and home theater system and game consoles. Worse, much of this spending has been on revolving credit debt, which can easily spiral into 24% to 35% interest rates per year.
   
2. The one factor buoyed our economy for the last ten years is the housing sector, specifically new house construction. These houses were being 100% financed using risky lending products (ARMs, sub-primes and interest-only loans) to buyers who were not being scrutinized with regard to their ability to satisfy their loan agreement. Hence, when ARMs started increasing or house values started dropping and people suddenly saw that they were in a negative equity position they simply walked away from their house loan because they had no real interest in the house.

Like all major events that occur in our lives this crisis will leave an effect. Banks and other financial institutions are now requiring a sizable down payment on house loans and proof of employment before a loan will be approved. Cars are a different matter. It sounds like we will continue to see 0% interest loans for some time, but I believe that we will continue to see a tightening in the approval process as banks require that the borrower prove that they can pay back their loan.

The larger question facing our nation is: Do we really need a new car every three years? Do we really need three flat panel TVs in the same house? Do we really need our houses to stay at 72 degrees all year long? Our whole economy and in fact our culture is based on who has the newest most expensive things. As an example, when I bought my house in Phoenix Arizona because of a relocation in 2007, the real-estate agent and the loan officer kept pushing me towards $500,000 houses when I only needed three bedrooms and two bathrooms. In other words, my wife and I made the decision that a $280,000 house was enough. Now, with home values plummeting the fact that I put 20% down and that this house is only 8 miles from where my wife's office is, I am thankful that I stuck to my plan.

Our generation (and the one before it) are now harvesting the crop we sowed for ourselves when as a nation we forgot our history (the Great Depression) and abandoned fiscal common sense. I can only hope that the youth of today will remember this crisis, that they will change their own personal policies towards financial discipline and FAR more importantly demand that the U.S. Federal Government does the same.

The true tragedy would be that after having experienced this crisis, that we would listen to people like Mr. Kloza who lament that we aren't spending more of our money driving or sending packages. Through our freedom to borrow money we ought not to spend on things we don't really need, we have been forging chains of indebtedness that will hold us thrall to our national debt, foreign investors and our own banks for decades to come.