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October 13th, 2008
06:09 PM ET

The bright side

Fareed Zakaria | BIO
CNN Anchor, “Fareed Zakaria – GPS”

Amid all the difficulties and hardship that we are about to undergo, I see one silver lining. This crisis has—dramatically, vengefully—forced the United States to confront the bad habits it has developed over the past few decades. If we can kick those habits, today’s pain will translate into gains in the long run.

Since the 1980s, Americans have consumed more than they produced—and they have made up the difference by borrowing. Two decades of easy money and innovative financial products meant that virtually anyone could borrow any amount of money for any purpose. If we wanted a bigger house, a better TV or a faster car, and we didn’t actually have the money to pay for it, no problem. We put it on a credit card, took out a massive mortgage and financed our fantasies.

At some point, the magical accounting had to stop. At some point, consumers had to stop using their homes as banks and spending money that they didn’t have. At some point, the government had to confront its indebtedness. The United States—and other overleveraged societies—has now gotten the wake-up call from hell.

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Filed under: Bailout Turmoil • Fareed Zakaria • Wall St.
soundoff (6 Responses)
  1. Stacey Rubin, AR

    I hve got to be frank, I don't understand why the panic. Maybe, I'm in a part of the country that expects an individual to pull his/her own weight. Two years I lost my house. I have had four jobs since then. There is only one person that I can blame that on, ME! There is always work. It is up to an individual to do what is smart and best for his family. I know that the road gets tough, but at some point an individual must learn to accept responsibility for his/her own decisions. A person must exercise good judgement and restraint when they take on the burden of a mortgage. Responsibility and accountability are key. I used to blame other people for the mistakes that I made, but it is on my shoulders to bear the weight and pick myself up. I think if more people looked inside themselves for help, they would find a person stronger than any government. Don't wait for someone to give you a piggy back ride! Stand on your own two feet and make a difference in your own life. Don't focus on what other people ae doing wrong. If you take care of you, theneverything else will fall into place. Every now and then you may need a hand, but recognize when you have to do what's necessary. Put pressure on your officials to do what's right and fair, but count on them to carry you to where you need to be, ultimately that's up to you. That's my talking point.

    October 13, 2008 at 7:48 pm |
  2. Max

    A world full of EXCESS in too many places.

    October 13, 2008 at 7:27 pm |
  3. Leslie Van Gelder

    question–Obama's "no tax for those making under $250,000. Is this net or gross? Question is from a small business owner.

    October 13, 2008 at 6:50 pm |
  4. xtina, chicago IL

    That's a good essay. It's the free market that enables us to make home equity loans and do creative financing; the bank has to use the system responsibly and the individual has use the system responsibly. Also, the Democrats in Congress should not force banks to make loans to people who can't pay back the money.

    October 13, 2008 at 6:46 pm |
  5. SM

    so now we are all going to pay more to bail out those who overspent!! The plan to reduce mortgages for some isn't fair to those who have been responsible. The only fair way to keep people in their homes is not to reduce principal, it is to extend the life of the loan to keep their payment low. The housing crisis started back under Clinton policies and has continued on, trying to be stopped several years back, but blocked by Democrats like Barney Frank. Scary that the government that got us into this mess, thinks they can get us out of it!

    October 13, 2008 at 6:24 pm |
  6. Bret Peters

    Well said ! What’s born in the dark will come to the light. My 89yr. old grandpa lives with me. He came over from Italy an orphan. Lived through the dust bowl, great depression, fought in WWII, work 2 jobs 11 hrs a day, took side lobs on the weekend, and raised a wonderful family. He has always said "If you don't have the money for it, well you don't need it." Although a republican he has been for Obama for 10 months. He has done his homework on both candidates, doesn't watch the news, and knows this is the most important election for himself, grandchildren ,and now great grandkids. 89yrs. of experience tells him in his heart, that he needed to share his views with all of us. "Pay as you go" is the safe course for a happy long life, for us and our country. I'm for Obama for 4 months now, it's the wise choice.

    October 13, 2008 at 6:24 pm |