January 25, 2009

The Risk-Takers

It's a figure of perpetual wonderment to me to the extent we Americans have spent ourselves into debt. In our sympathetic local paper, there were a few lines yesterday about a woman, an accountant, who is seeking help from our U.S. House representative because she was denied a conventional fixed-rate mortgage from her bank and so got an ARM which she now can't afford. This is bedazzingly bedfuddling because one of the solutions to our financial management problem, I thought, was for high schools to require financial planning classes and yet here this lady was an accountant. (Of course, accountacy isn't the same as financial prudence; after all Arthur Anderson - the most bedrock of bedrockian accounting firms - went out of business years ago.) But you would think though that the fact that she couldn't qualify for a fixed-rate loan might - just might - be telling her something. In this age there is no admission of where the buck stops.

I've decided that perhaps part of it is that we are simply a nation of risktakers and taking on debt, though risky, is part of our cultural DNA. If you can get an A.R.M. loan, well why not? Sure it's a bet on your performance and your company's performance and the economy's, since an A.R.M. would assume a rising income but... One thing that the Puritan immigrants of the 1600s had in common with German and Italian immigrants of the 1800s is an acceptance of risk, albeit not necessarily of the financial variety.

That's one spin. Ben Stein says simply that we lack discipline, calling us "free spending Peter Pans":
I have been pondering what advice to give them about money. What I keep coming up with is this: Do not act like typical Americans. Do not fail to save...I wish I could teach that work ethic to those close to me. I wish I could teach them that money is a scarce good, worth fighting for and protecting. But I very much fear that my son, more up-to-date than I am in almost every way, is more of a modern-day American than I am. To hustle and scuffle for a deal is something he cannot even imagine. To not be able to eat at any restaurant he feels like eating at is just not on his wavelength.
This isn't academic, since of my seven siblings counting my wife's side two have had to recently borrow in order to pay their mortgage and at least two more are in serious financial distress.

Never do I feel more the old fogey when I look back with what trepidation I put my John Hancock on my first mortgage document ('mortgage' means "dead note" I believe). Getting an A.R.M. that could float with interest rates was unthinkable.

I feel an old fogey also when I not only think about the possibility of losing my job but anticipate it.

It may be the result of a chronological accident, having become politically and economically aware during the period from 1975 to 1985. These years featured a severe recession ('82), as well as severe inflation ('75 to '79) and very high unemployment ('77 thru '82). So perhaps those of my exact age (45) might understand, though in a far less vivid way than those of the Depression-era, that "money doesn't grow on trees".

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