I have a problem with this. I have a large problem with a lot of things you have said, but I have a huge problem equating education to vacations and boats. One is part of upward mobility, seeking a better life. That isn't bad or wrong, and quite frankly, **** you for equating that with buying bigger and bigger homes.
I don't fault anyone for wanting better. I fault people for being reckless in their endeavors to achieve it, but I don't think the average American has been reckless. He's taking advice from the people he should and how to invest his money.
I didn't equate education as the same as boats or vacations. I said people were using the equity in their homes to pay for things that they would not have otherwise been able to attain- borrowing borrowing and borrowing. In other words, living above their means. Some parents were refinancing to cash in equity on their homes to pay for educations.
Upward Mobility? Someone wants to move up a social class. Let's take your average four year degree+Law school. They're giving up say a conservative estimate of 7 x $20,000 of earnings( $140,000), and spending another $200,000 on college expenses. Then, they are going to have debt service costs compounding against them($50000-60000?), in addition to crowd out spending that will prevent them from taking advantages of possible opportunities (???) or putting their money to work for them (???)
Doing this is a SUBSTANTIAL risk. Not only do you have to bank on the fact that you actually find (and keep) said dream job, but you've now dug yourself a tremendous financial hole. A hole that you have to take years to dig out of just to get back to where you were to start, let alone to "have upward mobility".
Yet, people today take on these costs without batting an eye. It's a slam dunk they all say. It's my ticket to a good life. If too many people beleive this, then you have what we have now. Rising costs, and diminishing returns on the investment.
Trust me. When it becomes accepted or "the thing to do", you better be running the other way.
What the average person can't brace for is the unfettered speculation in the markets by a handful of hedge funds and investment entities looking to nickle and dime every single other person.
http://maysreport.files.wordpress.com/2 ... resent.jpg
Why don't you take a good, hard long look at that graph.
Do you expect me to beleive that the average American was oblivious to the fact that this was NOT normal? It was only the hedge fund kings and speculators driving this? It was the actions of millions and millions of individuals that created this. That they could buy a house for $200,000. Cash in on $50,000 equity a few years later and then cash in again a few years later for $75,000 more.
You want to blame the banks for people borrowing too much? Just because the money is there, doesn't mean anyone had to take it. It's a two way street. You could load a table up with sweets and fattening foods. If I chow down for a decade, do I look in the mirrow and blame myself for being fat, or do I yell at the people who put the food on the table?
Americans became addicted to free flowing credit and things coming easy from nothing. Consuming. Individual households were consuming more than they took in. You can do that in the short-term, but over the long-run, it's of course impossible. Without savings, there is NO FUTURE.
The bill **** came due.
