According to an article in the March 10 in the Wall Street Journal:
U.S. families shaved down their debt load in 2010 to the lowest level in six years, we learned Thursday. On the surface, that’s great news for the economy—households putting their finances on a more stable footing can set the stage for more stable, sustained spending in the near term.
But the reasons behind the decline in debt in 2010 should temper our expectations for a robust recovery, especially for industries like real estate that largely rely on consumers’ ability to borrow. While some of the debt decrease was due to families retrenching and paying down debt purposefully, consumers defaulting on mortgages and credit cards also played a big part. And in an environment with tighter lending standards, that’s going to make it difficult for many of these people to qualify for a loan and buy a house.
Is it only me that finds something wrong in all this? Have so many Americans simply lost any sense of integrity, self-respect or personal responsibility? When things get tough (largely due to our own actions) do we just shift the burden to the rest of society or government. That is the same thing of course, but in the last few years we seem to have lost sight of that fact.
Here is another example. Flooding in parts of New Jersey have been a regular occurence for as long as I can remember and that goes back sixty-five years. If you knew that a certain area floods close to once every year would you buy a house in the floodplain? Better still, if you were a smart bureaucrat or politician would you keep paying for repairs on the same house time after time knowing that it was only a matter of months before a new flood hits?
The New York Times on March 11 contains a story about flooding in New Jersey, here is an excerpt:
Frank Polizzi is as water-weary as they come. He is 52, a printer in Pompton Lakes, where the Ramapo River had invaded his house for the seventh time in the 11 years he has owned it. He said he had only recently finished $80,000 of repairs from last year’s flood ($55,000 of it was covered by the Federal Emergency Management Agency). And now his house was a bathtub again.
“I don’t have a dime in the bank,” Mr. Polizzi said. “I’m trying to get my lawyer on the phone so I can close out my account, stop paying my mortgage and get out of here.”
Not only did this gentleman receive $55,000 to re-build (after the sixth time of flooding) he is now going to walk away from his mortgage because he had enough. Too bad he didn’t figure this out eleven years ago before he bought in an active floodplain.
What I find most interesting and disturbing is that this attitude seems to be a reflection of the point of view of the people in Washington who set the policies we all have to live by and at the same time enable this type of behavior and much more like it.