Economic Crisis - I don't have the answer.

It is consensus that the sub-prime lending fiasco is one cause of where our economy is today. It is hard to wrap our heads around all of the causes of the world economic problems. One explanation is that it's cyclical, and if this is the case, then the market will correct itself. Others blame the greed on Wall Street. I think the answer is even more simple than that. It goes all the way back to the first lesson of Financial responsibility...not to live beyond your means. Plain and simple, if you make $100 then you shouldn't spend $110.

I would guess that we are ALL guilty of breaking this rule. How many of us have credit cards? I do. On a larger scale, our government has been doing the exact same thing. It was only a few years ago that our country had not only a balanced budget, but a surplus. As of July 2008 (the latest statistics I have), our government had a budget deficit of $ 482 BILLION. And from watching the news today, I believe that number is about to be $ 1.182 TRILLION. Is this the solution to the problem? I honestly don't know. My fear is that it is just a sand bag thrown into New Orlean's levee during Katrina. I'm not going to pretend that I know the answer. If this works, then I may not mind the thousands of tax dollars that this will cost me personally. My biggest fear though, is that it will be just a temporary solution, and not only will I then be responsible for still paying the extra thousands of dollars in taxes...but...I will be asked again in 6 months to give another bailout to a different set of company's going under.

We need to get down to the reasons that these banks need bailed out. Is it just greedy Wall Street? No. It began with Americans making too risky of investments themselves, in hopes of huge payouts. When I researched how much of a person's income their house payment should be, the consensus is 1/3 of your salary. I remember Mr. Burton (my high school VOC school Accounting teacher) telling us students the same thing. I disagree with this figure. I believe it should only be 1/4 of your income. Does this make me risk adverse? Absolutely. I have gotten into many arguments with our Financial Advisor that I am TOO risk adverse. My response to him is that having low risk will never make me a part of the super rich, but it will never leave me homeless either.

Sorry for the rambling.