Culture of Debt

That is what happened with housing. This gets tricky, because unless you are wealthy, few can buy a decent home without debt. Therefore the rule of "no debt" cannot apply. Instead, the need is for responsible debt, gauging what an appropriate amount of debt is, given your paycheck and your obligations.

But it takes two to tango. For years, people have sought more house than they could afford. But the banks would say no. Until now.

The instant-gratification culture that has run rampant at the consumer end of the equation has now seeped into the lending end. Suddenly, when people apply for a loan for twice as much house as they could afford, the bank says yes.

Over a million people have found themselves unable to make those mortgage payments. And so the banks find themselves overextended. And the investment houses using those mortgage notes as investment assets found their asset values plummeting, resulting in the massive wave of losses that has caused the damage we have seen thus far. And the worst may well be yet to come.

There is much blame to go around. The president and Congress are trying to put out the fire. But once they do, we should not allow the house to catch fire again. It may not be exciting to talk about teaching and following sound principles regarding debt management and prudent planning. It is even less exciting to talk about finding contentment and happiness in ways other than always needing to lunge after something newer, better - and more expensive.

But we must, in our schools and in our homes, and by our actions.

This financial crisis is the result of the culture we have created. And it will happen again and again if we don't address the root cause. We must do better.