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>"The Party Is Over"

>When Nancy Pelosi infamously stated “The party is over” in her now-controversial speech on Monday (which I don’t take as exceedingly partisan, by the way), I don’t think that she recognized the truth and scope of her own words. Her words were directed towards “high flying Wall Street operators” and implicitly those whom she deems as greedily profiting with them, namely George W. Bush and his cronies.

Cross-posted from http://dwightgwatson.blogspot.com

Pelosi’s contention was that the economic crisis we currently face was caused by “an anything goes mentality, with no regulation, no supervision, and no discipline in the system.” Of course, Pelosi only applied this narrowly to Wall Street and failed to see how those words describe, quite well, the financial choices of the average USAmerican. In effect, Pelosi told USAmericans on “main street,” “It’s not your fault.” I think she was dead wrong, blinded by either ignorance or political cynicism.

Certainly much of the blame for the current crisis can be placed on corporate greed. Much can also be placed on the ill-executed Community Reinvestment Act, which bullied banks into making risky loans in order to move more low-income USAmericans into home-ownership. But, the hard truth that Pelosi failed to see in her statement is that much blame lies with us, the USAmerican people.

For almost a generation we, along with our financial institutions, have consumed and lived beyond our means because of the implicit promise that the government will always be there to bail us out and protect us from suffering the consequences of our unwise decisions. Rather than applying the wisdom of Joseph and storing up the wealth of prosperous times to access when times get lean (Genesis 41), USAmericans have consistently spent everything they make. And when that is not enough to support our lifestyle, we borrow and defer the immense cost of our appetites to the future. We demand more and more while seeking to expend less and less to get it.

What we have come face to face with in USAmerica is not merely an economic crisis; it is a character crisis. The economic crisis is merely a symptom, the natural consequence, of a culture fixated on an unsupportable standard of living. We have gladly embraced comfort and pleasure, naively assuming that the historically unparalleled prosperity that we have enjoyed would continue forever. And now, indeed, the party is over.

The solution to this crisis is not an economic one, such as the “bailout.” A bailout will simply defer the inevitable just a little bit longer, as well as reinforce the belief that the government will be our safety net no matter how high a tight-rope we choose to walk. We need to do FAR more than adjust a few economic policies to solve this crisis. We need to radically change our entire culture. We need to repent of our irresponsible self-centeredness and return to the character that made USAmerica great – hard work, frugality, delayed gratification, personal responsibility – just to name a few. Anything less than this is just a band-aid on a mortal wound.

UPDATE:
From the Wall Street Journal: We are told this is a “bailout for Wall Street.” But if Americans are honest with themselves, they will admit that bankers are far from the only cause of our current predicament. The U.S. is living through the aftermath of a classic credit mania, one that all of us enjoyed while it lasted. We don’t remember many protests when home prices were rising by 15% a year, or when interest rates stayed at 1% for a year and real interest rates were negative for far longer.

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Discussion

9 thoughts on “>"The Party Is Over"

  1. >I get ya, however, I don’t think we have bills or laws that force people to sell drugs. Otoh, we have things such as the Community Reinvestment Asct which forced banks to give risky loans. Of course, there’s a lot more to it than just that but there’s a lot of blame to go around.

    Posted by J.Wizzle | October 4, 2008, 11:40 pm
  2. >I suppose my point in bringing my own experience into things is to note that “credit” per se is not itself the problem. Without it, Mary and I are still raising Micah in an apartment.And with regards to blaming the debtors, I do think it’s a blame-all-around deal, but I think that the debtors here are more victims than the creditors are. I suppose I think of it the way I think of the heroin trade–of course the junkies share the blame for the drug culture, but I think that the law is right for locking up the dealers longer than the addicts.

    Posted by Nathan P. Gilmour | October 4, 2008, 11:26 pm
  3. >Nathan, your second post actually makes the point that you are one of the few fiscally responsible USAmericans! The MO for the past decade or so has been “buy all the house you can buy and count on the super-inflated equity to keep you from getting buried under it.” Those shady mortgage companies didn’t go twisting people’s arms to take loans. So, it’s not the use of credit that is the problem, but the flagrant abuse of it to secure a unreasonably high lifestyle.

    Posted by Dwight Watson | October 3, 2008, 3:04 am
  4. >Oh, and I do enjoy the fact that, three and a half years ago, when we did get a loan to buy the house, we went with the fixed rate rather than saving a couple hundred bucks a month on a temporary rate. We’re still pounding away on our mortgage, and it’s not yet burying us, so I figure we’re still doing alright.I just fear what comes when I finish the Ph.D and have to get a gig somewhere else and we have to figure out living arrangements.

    Posted by Nathan P. Gilmour | October 3, 2008, 1:08 am
  5. >I see your points in the abstract, but it’s also nice being able to raise my son in a house on teachers’ salaries. I know that such a thing is really a luxury in historical terms, but I can’t say I haven’t enjoyed it.

    Posted by Nathan P. Gilmour | October 3, 2008, 1:06 am
  6. >You are absoultely correct in saying that the solution will have to go much deeper than changing economic policies. The problem is the public doesn’t want to hear that. The public wants the quick and easy fix. They want to know what the goverment can do for them and they want it now. The politicians know that and that’s why they don’t talk about it. It’s just easier to ignore it and hope the problem goes away. Of course, it doesn’t. It’s just makes it worse by delaying the inevitable.

    Posted by J.Wizzle | October 2, 2008, 12:16 am
  7. >Exactly right Mark, which is why I say the solution must go MUCH deeper than changing some economic policies. We’re witnessing a cultural decay comparable to that of Rome.

    Posted by Dwight Watson | October 1, 2008, 10:46 pm
  8. >What shocks me, and it shouldn’t since I was involved in it when I was in the business world, is that our economy revolves around primarily CREDIT. If the average Joe can’t hock himself up to his eyeballs in credit then the economy goes bust. I know this is a bit of an over-generalization, but fundamentally it’s right! That’s a sad indictment against our culture.

    Posted by Mark Mathews | October 1, 2008, 10:15 pm
  9. >Great post, Dwight. I totally agree.

    Posted by J.Wizzle | October 1, 2008, 9:48 pm

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