Economic crisis of our own making



As a college student, I don’t have a lot of money in my savings account, nor do I have a mortgage, a retirement plan or a diversified stock portfolio. I don’t even possess a credit card.

Growing up in a fiscally conservative household, talk of the economy often floated around. As of late, that talk has turned to the impending troubles that the American economy might soon face, but I never paid much attention to it.

That was until recently, when financial giants with household names, such as Fannie May and Freddie Mac, had to be rescued by our government. The events that ensued were even more depressing.

The Federal Reserve bailed out the American International Group (AIG), an insurance company, with an $85 million loan earlier this month. Last week, Washington Mutual, America’s largest savings and loan bank, was seized by federal regulators and most of its assets sold to J.P. Morgan,

As I watched these stories unfold on CNN, I realized that America might really be screwed.

I feel like the sudden downturn in the economy has been a long time coming and that we have brought it on ourselves. Should we have seen our impending economic doom approaching? Absolutely.

For too long, we have lived with an “anything goes” mentality towards the economy, and that will no longer suffice to keep us going. Frivolous overspending, living beyond our means and conspicuous consumption have caused us, as a country, to travel down this path. Perhaps we just didn’t notice because we were glued to our iPods and cell phones. Or perhaps it is because Americans are bred to believe that our economy is not only superior to all others, but also infallible.

Over the past few years, it has been too easy for financial institutions to lend too much money. The appeal of credit cards, especially to young people, is vast. The seeming advance of “free” money is tempting to anyone. Not to mention the fact that it has also become completely impossible for the average American to buy a house without borrowing tens of thousands of dollars.

So while we were busy putting forward an illusion of prosperity, our country slipped deeper into an uncontrolled financial crisis.

Earlier this week, the first $700 billion bailout plan to buy up troubled mortgages presented to Congress failed, shot down by members of both parties. As of press time, a second, slightly altered bailout plan was being considered by Congress.

Although fans of the proposed bailout claim that it is immediately necessary to prevent further wreckage of economy, retain faith in the credit market and theoretically save millions of jobs, the cost of the plan is exorbitant. Although the government has pledged $700 billion, there is a chance that a bailout could cost less, but there is also a chance that it could that cost up to one trillion dollars.

And where would all that money come from? The pockets of the American taxpayers, of course.

The last time our country was in such a dire economic state was the Great Depression, and it took years to pull ourselves out, only with the aid of World War II and the brilliant policy-making of Franklin Delano Roosevelt.

The United States is already locked in a seemingly endless foreign conflict, and I don’t think either of the proposed bailout plans could be described as brilliant.

So, we have nothing left to do but continue to sit on our hands and wait for politicians to fix the problems we all caused. I have the feeling we might be waiting awhile.