More On The Credit Collapse: You Asked, I’m Answering

Quite a few folks responded to my column entitled “The Credit Collapse Blame Game.” And that’s a good thing. It’s always nice to know someone’s listening, whether you agree with me or not. In response to your comments, I have a couple follow-up notes of my own.

First, a number of readers told me that over the years they’ve made responsible financial decisions, thus they aren’t to blame for the current crisis. Fair enough. I’m sure there are some who used sound judgment in making big-ticket decisions like purchasing a home. Just understand folks, you are no longer the majority of America. Sad but true, you’re a rare breed, a miniscule percentage of the population. The vast majority of Americans are in debt, as a popular television commercial says, “up to their eyeballs.” And the problem is not only their mortgage, but the tragedy extends to their car loans, credit cards, bank overdrafts and personal loans. Make no mistake; this all contributes to low liquidity and poor credit.

Secondly, too many people are taking a narrow and short-sighted view of this problem. By now, we all realize that the housing market plays a major role in this nation’s economy. When the housing market is strong, we all benefit, both in business and in our personal lives. When housing is on life-support, however, everyone suffers, whether you’re directly tied to the real estate industry or not.

Economists say this problem was 10 to15 maybe even 20 years in the making. So during these last 20 years, did you benefit at all from the full-bodied economy supported by the housing market? Did the loosening of credit and the free flow of money profit you at all in your business or personal life? You bet it did, and how it did could fill two more columns.

Here’s the deal: You can’t have your cake and eat it too. If, over the last decade or two, you benefited or even participated in a robust economy partially prompted by a superficially inflated housing market, then you were part of the problem. Now, we will all join together in being the solution.

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