If you believe big media, the economy is in trouble. If you worry about job
layoffs and your inability to pay bills, you may be thinking about voting
for Democrats this fall, which is the point of the negative media coverage.
Every four years when a Republican is president, big media carry stories
about economic gloom and doom. But is it true? It depends on the standard
you use.
Last week, The Washington Post carried a story that is a metaphor for what
ails us. It was about a Maryland couple whose mortgage lender took back what
remained of a $95,000 home equity line of credit. The lender explained that
the couple's home had fallen in value and it did not want to shoulder the
risk that they might owe more than the house was worth. The couple was using
the equity line to pay preschool tuition for their twins.
A good financial adviser might have helped them avoid this predicament, but
we are immediately led to the supposedly bottomless well of the federal
government. Politicians, especially Hillary Clinton and Barack Obama, pledge
to shoulder the responsibility of making sure that people whose mortgages
are higher than they can reasonably afford and whose debts are larger than
they should be get bailed out by the rest of us who made right financial
decisions and practice living within our means. I know, this sounds cold,
but only to those who live this way.
Lenders across the country are pulling the plug on equity lines and
tightening credit after a lending spree to people for whom the housing
market was their pot of gold.
Much of this economic "pain" is self-inflicted. Rather than purchasing homes
they could not afford - or putting too much down, making them cash poor -
they might have invested their equity in balanced mutual funds (the Dow
Jones Industrial Average rose 11.59 percent over a 10-year period). Such a
path could have avoided the tight spot in which many now find themselves.
Some of the lust for bigger and better is human nature, but a lot is the
result of consumerism. The Timex watch is no longer enough. We now must have
a Rolex, though both accurately tell time. The adequate low-end automobile
is insufficient. We must trade up to a luxury car with numbers and letters
on the rear that mean nothing, but convey "status." And the house we are
living in, which would have been more than adequate for our parents and
certainly our grandparents, must be upgraded to larger digs in order to
impress, if not growing families, than enlarged egos.