My CPA and I are buddies. Most of our conversations involve very little business and a great deal of personal news and good-natured teasing. Today, however, it was different.
Chris, normally a positive and good-natured guy, is worried. He looks at the mortgage meltdown, the amount of our bonds owned by the Chinese and other countries, our massive national debt, revolving credit debt, our dependence on foreign oil and other factors - and he's afraid we're in for bad times. Very bad times.
So we talked about how Americans are buying cars they can't really afford, houses that are above their means, electronics unheard of only a few years ago, 55-inch plasma televisions and $350 sneakers. And of course, using credit.
I'm a real estate investor in my (ha ha) spare time. I recently looked at a fourplex that had been foreclosed. The owner had purchased a 100% ARM. That's right, he put nothing down to buy the property and got into an adjustable rate mortgage. Why in the world would (a) a reasonably intelligent person get themselves into such a stupid loan, and (b) a lender approve such a stupid loan?
It's a symptom of what's ailing us - we're buying without thinking of the consequences, and that behavior is now coming back to haunt us.
"The thing is," I say at one point. "If you go out and buy a $5500 television instead of a $500 TV and a $5000 mutual fund, its your own fault."
"Agreed," said Chris. "But that's exactly what we're doing."
It's at that point, more than any single time before, that it struck me: Our culture is our economic downfall. We have absolutely done this to ourselves. Our priorities have become so twisted that we value material things more than our future - more so than ever. Instant gratification has blinded us from reason.
Who's going to turn this around? How do you motivate a culture to turn on a dime?
Let me know, I'll pass it on to Chris.
CM
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