We Have Not Addressed the Real Financial Problem

Who is to blame for our current financial crisis?  Greedy homeowners?  Real estate agents? Is it builders, mortgage brokers, bank lenders, wall street businesses, congress, Al-Kida?

Let's look at the free enterprise model.  

Individuals are given incentives to own business that sell products to individuals.  By owning or working for one of these businesses, people gain wealth and have the buying power to buy products from other businesses.  The entire process is built on a core fundamental of supply and demand.

So, the businesses create product to sell to the public.  The competition for product sales drives businesses to create marketing strategies to motivate people to buy.  The buyers are given visual and audio stimulation to choose different products.  

Sounds simple and it is.  But let's look at where the problem exists in this model.

Business are motivated to "sell" and therefore do not have the ability to be a moral conscience for the buyer.  They do not have the ability to think for every buyer to help them know if they can really afford the product they are buying.  So, consumers buy based on what they are allowed to purchase.  If they can get a loan for a tv, car, home, clothes, or anything else, they have the freedom to purchase it.  This is what the sellers are hoping.

Our current crisis is because consumers purchased more than they can afford.  We consumed beyond what our paychecks and balance sheets could absorb.  If we don't buy what we can't afford, banks don't overextend themselves in lending.  The credit bubble (lending beyond what the balance sheets of consumers can handle) is the problem right now.

Ok, still haven't told you anything you didn't know.  Well how about this.  The problem goes deeper than the consumerism purchasing decisions.  I think the problem is lack of education. When was the last time your kid came home from school and asked you to help them with mortgage calculation homework?  What about check book balancing?  What about investment strategies or stock market short selling?  We don't teach these things to our kids but we let them loose in a world that will attack them that has no moral conscience.  

Our education system is to blame for this crisis.  The majority of American's are "starting" to learn about these issues in the newspaper and on the internet.  This is a little late.  Unfortunately, the majority of them still don't understand it because they don't know the fundamental financial basics.  So, we will continue to repeat this type of problem.

The rest of the world hates us because of our gross consumerism attitudes.  Even my best liberal Democrat friends, who hate the American free enterprise system, are deep in debt and can't help themselves when it comes to buying.  We teach that people are entitled to an American Dream of having "stuff" and having it NOW.  We teach the dream but we don't teach how to get it.  We inspire people to entitlement and only those who are lucky enough to get educated on the process end up winning.

McCain and Obama - Address this issue and you will make a difference.  Otherwise, we will see this problem raise its ugly head again.  American's have a very short memory and a terrible basic moral compass.  We think we are owed something for nothing.