We've simply become accustomed to buying what we want, when we want it, regardless of whether or not we can really afford it. Consumerism has been driving our economy for years. And politicians have encouraged it, including President Bush, who told us all to go shopping to bring us out of recession after the terrorist attacks on Sept. 11, 2001. Again this year, politicians urged us to spend the tax rebates that Congress passed as part of the stimulus package. I can't recall a single political leader that suggested we should pay down our debts with those rebate checks.
As a result, our individual debt continues to grow and our savings to shrink. The Bureau of Economic Analysis reports that for August 2008, the personal savings rate as a percentage of disposable income was 1 percent, but that "saving from current income may be near zero or negative when outlays are financed by borrowing (including borrowing financed through credit cards or home equity loans), by selling investments or other assets, or by using savings from previous periods." Baby boomers have little prospect of retiring on their savings, especially given the current declines in the stock market.
We have become a nation of debtors, and our only solution seems to be to turn to the government to bail us out. And it's not just Wall Street firms looking to be rescued. Politicians are fearful of passing a financial package that does not include some relief for borrowers as well. Certainly it is worth doing something to prevent lenders from making bad loans to individuals without the credit or down payment to ensure likely repayment. But automatically bailing out borrowers who weren't credit worthy in the first place is no solution.
Ultimately, all of us have got to rid ourselves of the addiction to spending money we don't have. Instead of pointing fingers, we'd better start looking in the mirror if we want to understand who's really to blame.