TEXT OF COMMENTARY
KAI RYSSDAL: Let’s see, we’ve already told you about Ben Bernanke’s gloomy comments and Fannie Mae’s troubles. We touched on foreclosures, but wait, there’s more. We learned this morning sales of new homes fell to a 13-year low last month. Same vibe for prices, they were off 15 percent from a year ago. Between banks, mortgage brokers and consumers, there’s plenty of blame to go around.
Commentator and economist Susan Lee says a little worry early on would’ve helped.
SUSAN LEE: When the economy turns bad, blame is never far behind. That’s understandable, but what are we to make of the economists and stock market swamis who are blaming Americans themselves?
The blame game started in January, after weak retail sales were announced. Suddenly a bunch of commentators popped up. They warned consumers that they were talking themselves into a recession. They encouraged Americans to keep on spending. They argued that the economy was essentially sound, and they poo-poohed fears about the collapse in housing prices.
Trouble is, it was just this “what-me-worry” attitude that gave us the housing crisis in the first place. Brokers made mortgage loans to people who couldn’t afford them, but the brokers weren’t worried because they knew they could sell the loans to banks. The banks weren’t worried because they knew they could package the loans and sell them to investors. Investors weren’t worried because the ratings agencies said the loans were solid and the ratings agencies weren’t worried because they didn’t have any skin in the game.
Well, in retrospect, it looks like a little anxiety would have been a good thing, and now there’s plenty to worry about. Here’s the short list. Home prices continue to slide. The deficit is ballooning. The dollar is weak. Oil is expensive and the credit crunch is spreading, and don’t forget about retiring boomers who’ll begin to slurp down Social Security and Medicare funds before we know it.
Worse, all this is happening when Americans don’t have much of a cushion. The savings rate has been under 1 percent for the past three years. That’s way below the average savings rate of 8 percent between 1980 and 1994. We’ve had our decade of an Alfred E. Neuman economy and the results aren’t pretty, so I’m not going to blame people if they start thinking like Ben Franklin.
KAI RYSSDAL: Economist Susan Lee lives in New York City.
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