Too much and not enough information is available. I have been talking about the economy since early last summer. My 17 year old Ashley didn't seem overly interested until gas started dropping like a rock. A recent conversation...
Ashley: Will gas drop to $1 a gallon?
Victoria: God I hope not! The price is dropping because people aren't working.
Ashley: Who isn't working? The autoworkers? Aren't they getting a bailout?
Victoria: Hopefully. The companies say they just need to borrow money to keep day to day operations moving along until they can get their companies efficient. On the other hand there are 1,000,000 cars on lots right now so people will be laid off and companies will not be able to hold out until they do get efficient.
Ashley: Why aren't they efficient?
Victoria: They are owned by millions of people so short term profits are more important than long term plans. Easy credit allowed them to borrow money without being sure they could pay it back. So they kept on doing what they were doing and not looking into the future.
Ashley: I thought they were too big to fail.
Victoria: It's funny. The ones who will suffer the most, the middle class, says no. Most of them still don't get that global business means global wages. The politicians and executives in the top 10% of all income earners say yes. They get it.
Ashley: Where will the money come from?
Victoria: From you and your children and maybe your children's children.
Ashley: It's not fair that I have to pay for for that!
Victoria: Sorry Honey. It's not. I don't want this for you. Grandpa got what he had by saving and getting loans he could afford to repay. I'm at the tail end of a generation that didn't have to look more than a couple days for a job or worry about health care or take care of parents and children at the same time. Nobody believed it could end. Plus Social Security guarantees a minimum payment every month and a little bit of health care so there seemed to be a safety net.
Ashley: So you're saying that you really don't care what happens to my generation!
Victoria: Of course I care. But most people have taken the same short term approach public companies have.
"I want it now. I will pay later." When all our buying and paying take place only on paper as opposed to handing over actual money we lose our sense of its realness. Kind of like buying a house and then borrowing against its value to get more stuff and then finding out we owe more than its worth. People are always astounded about that but it happens whenever owning a house is considered a form of savings. It's not.
My generation has believed in borrowing every dime we can, hoping we go to heaven just one day before the reverse mortgage has run out.
Ashley: But you always say all sins come due.
Victoria: The people putting all this together consider that the beauty of their strategy. Their borrowing sins come due on your watch.
Ashley: Are you serious?
Victoria: Completely.
She walked away and I'm not sure she believed me. That's okay. I really can't believe it myself.