Our “Strong” 90’s Economy

While reading through some blogs regarding the current election year and the campaigns that will soon get underway after the DNC and RNC, I read something about how strong our economy was in the 90’s. The statement was made, apparently, in an attempt to give credit to the Clinton administration for being in the Whitehouse during such strong economic times as if they had anything to do with it.

Of course, the other implication is that the current recession should be put on the shoulders of the current administration.

While I am willing to concede that the current administration is not having a positive impact on the current economy, I am hesitant to shift the entire blame to the Whitehouse. Just as I am very hesitant to give kudos to the Clinton administration for the seemingly strong economy during their administration.

Certainly, the occupants of the Whitehouse at any given time do have a certain amount of influence on the economy, I think it would be foolish to overestimate their influence. There are many factors that go into the American economy, and governmental policies are only once such influence.

As I read more and more people backing the Obama campaign, something that I continually see are stories about how various people are struggling to make their mortgage payments and keeping up with their bills. While I certainly would never wish it upon anyone to loose their house in a foreclosure or have to file bankruptcy due to excessive debt, can somebody please start taking at least some responsibility for their own situations?

Although, on the surface, the American economy seemed to be very strong during the Clinton administration, I think something that people need to start realizing is how much of the spending (which created the impression of our “strong” economy) was done with credit cards, loans, second-mortgages, etc. When you take that into consideration, it becomes clear that our whole economy over the past 10 – 15 years has been built on a foundation of debt! What should one have expected in this situation other than the fact that it would eventually come crashing down around our ears….as is happening right now!

Our whole economy of the past couple decades has been a facade! People were getting deeper and deeper into debt and buying things with borrowed money. All of the mortgage companies were coming up with creative financing plans to help us buy more house than we could afford…auto dealerships started pushing auto leases, and the media kept indoctrinating us with an “instant gratification” mantra that the American people, for the most part, built their lives around.

Now look at us. People are loosing their homes that they should have never bought in the first place. They’re filing bankruptcy because they can’t pay their credit card debt. They’re struggling to pay for their cars because, after three or four or five years of leasing their vehicles (in the name of “keeping the payment down”) they’re starting to realize that they don’t own the vehicle when the lease is up, so they jump right back into another lease because they have nothing saved up for a down payment on a new car. And the cycle continues.

I remember going to an IBM class in Denver about seven or eight years ago and listening to someone tell me how he had “figured it all out” because he would rather make monthly payments to his credit card company (at about 15% interest at the time) than pay them off and invest his money at 10-15% interest (at that time). And, worse, another classmate asked to get his e-mail address so she could learn how to manage money from him!!!

This is the mentality of people nowadays with regard to financial management. People don’t budget any more. They don’t count the cost of using credit cards. They want things and they want them now. On top of getting themselves into financial trouble, look at the effect it’s having on the next generation. I have never seen before such a pervasive attitude of entitlement as I see with the up and coming generation.

Kids nowadays expect their parents to buy them things, give them money, etc. I see the cars that high school kids are driving today and I’m shocked! My first car was only a year younger than me when I bought it. And my parents didn’t buy it for me. I had to save my own money. Sure, my dad went with me to check out the car and make sure I wasn’t going to get snowed, but it was my money. I earned it.

The more we continue on this path of instant gratification, overspending, buying on credit and just a general attitude of entitlement, the harder we’re going to crash and burn.

Don’t believe me? Find someone, yes they do exist, that has no car payment, no credit card debt and no mortgage on their house (I’m talking about homeowners with no mortgage, not renters) and talk to them for a while. I will bet that you’ll get a sense that, while the current recession is affecting them, it is probably far less of an impact on them then the guy who has $25K on credit cards, a $600 lease payment on his car, two mortgages on his home and a couple young kids who will eventually expect mom and dad to buy their first car, pay for college, etc.

That first group of people I described will be better prepared to help their kids with college tuition, buying a car, etc. And, those kids will probably be better prepared because, hopefully, their parents who have done such a great job keeping out of debt have taught them to be fiscally responsible. Hopefully, they’ve learned to budget their money, save up for what they want and not buy it until they have the cash, avoid overspending. I’m willing to bet those kids are more grateful, less wasteful and actually appreciate the things they get or earn more than the latter group of children / young adults who feel that society and / or their parents owe them.

So, instead of pointing our fingers to Washington D.C. and expecting them to fix our financial problems, let’s take a moment to take some responsibility for our own lives for a change. Perhaps, if we do that, the little bit of influence that the Presidential administration does have on the economy will be more effective.

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