Minyanville had a great post the other day, actually the quote was from an earlier post they quoted themselves, about an interesting perspective about the cause of the so-called subprime crisis. Of course, the same can be said of the entire credit crunch and financial meltdown.
“I believe that in time, historians will define the last twenty years in America as the “Age of Aspiration†where, thanks to unprecedented levels of credit, Americans could become anything they wanted. Where, thanks to zero percent down debt and a seemingly robust economy, we could own bigger homes, fancier cars, and more lavish vacations – where our bounty was limited only by the boldness of our wants.â€
I feel this analysis is on the money. Americans live on credit, maxing out credit cards, personal loans, and using their homes as an ATM machine, all to satisfy their desires. We are a society of the “got to have it now” mentality, which has destroyed the finances of most Americans.
In this manner, we have only begun to see the side effects of the credit tightening currently taking place. As time goes on, bankruptcies, not just foreclosures, will be making headlines as overextended Americans can’t make ends meet any longer to support their “habit”. Of course, their lack of fiscal discipline will encourage them to walk away from all of their debts, not just their mortgages.
The good news is that we are not alone. Since we have “Americanized” some places in Europe, they will feel the same effects in the future as their crisis is just beginning.
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