Fresh out of college and working briefly at the Glendale Mall I noticed that the cars parked in the fire lanes, blocking fire hydrants, and parked underserved in the handicap spaces were expensive cars. It was mostly Cadillac’s, Mercedes and BMWs, seldom Chevettes, Civics or VWs. It seemed the wealthier folks just felt . . . well, entitled.
While I was harshly judging the well to do for their sense of entitlement, I was wracking up foolish debt with my first credit card. It was so easy to buy clothes, music, concert tickets, and dinners out with money I didn’t have. There’s a foolish sense of entitlement in that, too. As if the rules of balanced budgets somehow didn’t apply to me.
Your see, the rich aren’t the only ones whose sense of entitlement led us to our current economic woes.
The media has had a field day reporting on insane bonus payments to Wall Street bigwigs – the very bigwigs whose financial shenanigans helped tip us into economic chaos. And we regular folk (including me) have been filled with outrage and disgust. But as we’ve flogged the rich boys on Wall Street, not to mention cabinet appointees who “forgot” to pay their taxes, I keep thinking about the economic foolishness all around us in our middle class world this past decade.
True, the boys at the top have been gluttonous pigs.
In 1980, the average CEO earned 42 times as much as the average worker. By 2005 CEO pay had risen to 411 times that of the average worker. These folks helped drive our economy off a cliff while they were stuffing their pockets with cash.
But the middle class has been reaching beyond reason, too.
Right here in Noblesville there are neighborhoods built in the past decade or so where as much as 10% of the homes have gone into foreclosure. We’re not alone. According to RealtyTrac, last year more than 2.3 million properties experienced foreclosure filings. And I don’t just blame lenders and builders who led home buyers to their doom, I also blame the buyers themselves who sat across the desk with the bull shit meter going off in their heads, but going along because it gave them what they wanted - a new house, a bigger house, or simply more real estate bling.
CNNMoney.com reports that in 2006 and 2007 alone, there were nearly 1.4 million consumer bankruptcy filings in America. The overwhelming majority – middle class consumers.
So who was spending beyond their means, assuming someone else would pick up the tab? Not just the boys at Merrill Lynch, who handed out $3.6 billion in executive bonuses this past December while their company was going down the tubes and they were coming to the government for a bailout. It was also regular, middle class consumers run-amuck with credit cards, car loans, home loan refinances, and payday cash advances.
And like the Wall Street boys who paid themselves while their ship was sinking, in my day job I’ve seen what middle class people do when they’re about to lose the home they couldn’t afford in the first place. Many pull out and resell the furnace, AC unit, kitchen cabinets, and light fixtures. It’s not uncommon for banks to repossess houses right here in Noblesville that have been stripped by the very people who didn’t make the payments in the first place.
When the whole tree is rotten, it’s a little silly for the roots to bad-mouth the upper branches.
What’s the next wave of foreclosures likely to hit our economy? Properties bought by upper middle-class investors who watched too much HGTV and late-night get-rich-quick infomercials, then foolishly invested in flip projects or new condos using interest-only loans.
Yes, the foolhardy can be found at all income brackets.
According to BusinessWeek, middle class American consumers are carrying nearly $1 trillion in credit card debt. That’s more than the President’s entire stimulus bill in credit card debt alone!
The simply reality is, our entire country, from top to bottom has been living beyond its means, and feeling entitled to it.
But you wouldn’t know it listening to radio call-in talk shows or listening to co-workers around the water cooler. It goes something like this, “How is it the CEOs who caused this mess get big pay packages while little guys like us who play by the rules have to pay taxes to clean up their mess?”
The truth is, lots of people at all incomes levels have not been playing by the rules.
True, already wealthy folks who money-grub to buy a bigger vacation house in the Hamptons look a lot worse than the little guy who overextends on his credit cards to buy his label-conscious kids trendy clothes. But they’re both part of the same problem.
In his address last night, President Obama said that, “The day of reckoning has arrived.” And that’s true for everybody, not just the guys at the top.