don't blame the US government

I cannot agree with blogger and pundits who blame the government for the collapse of the mortgage market. 

I blame investors who demand returns on their investments that outstrip the market.

I blame CEOs who can make bonuses in the double-digit millions that could feed a village in Tibet.

 I blame consumers who demand more for less, rack up credit card debt, mortgage debts, and fail to live according to their standard of living. For those with no down payments on homes, who continue to live the American dream, and use credit cards or reverse mortgages to pay for bigger toys; new cars every 3 years, expensive vacations, technologies they cannot pay for with cash (HD TVs, computers and computer peripherals, blackberries, cell phones for their 10 year-olds), or luxury items to help them keep up with the Jones'. 

These are middle class families who must wear designer jeans, or give in to their children who will wear nothing less. Parents who cannot say NO to themselves, much less their children are building up a debt load that they cannot maintain.

It is time to contract: figure out the difference between wants and needs. Reduce your debts, live in a home you can afford and live life in the present, in a reality-based budget in which layaway programs can help us to only purchase wants that you can afford. I am surprised as middle class Canadian complain about this economic crisis, in which the truth far exceeds the fear mongering threatened by taxpayers.

What has happened is that as consumers and home owners in the US cannot afford to keep their Credit Ratings, their costs go up, i.e., insurance and health care. Americans using credit cards to pay their mortgages use a short-term solution doomed to failure, with an impact on all taxpayers. Credit card debt is a slippery slope. Far better to carry a line of credit, than credit cards that charge exorbitant rates of interest. The trick with some credit cards: unless you pay the entire amount you pay interest on the original balance which compounds interest payments. Check the fine print.

In the economic boom of, for example, the oil industry in our Canadian west, people buy bigger, better, more sophisticated and keep an inventory of stuff they could not afford in a slight downturn of the market.