I had a talk with someone the other day and we both believe that 1) college is definitely not for every one , and 2) it is far more useful to learn a good trade. College should be to educate the mind, to teach one to embrace reason and rationality. A class full of psychology, philosophy or sociology majors frankly will be hard put to find work in those fields – however a class of trained electricians or plumbers should do just fine. As for home ownership – not everyone is cut out to own property and the almost elitist version of those who rent their apartments (32% of American householders are renters – not owners) needs to change. If anything the current financial crisis and the subprime disaster should have taught us is “Cash is King”and that money in the bank is more valuable then fluctuating investments. In the old days owning a house was a source of pride in ownership, a place to live, and a place to raise ones family, somewhere along the line it became just another financial investment. Just like the way we stopped being a nation of manufacturers and producers and transitioned into a service economy, we have lost our way. I am tired of going to the store and all the shirts I want to purchase are labeled Made in Bangladesh.
by Victor Davis Hanson
The 2008 financial crash originated with a housing bubble.
Not long ago, the cheap-money policies of the Federal Reserve, the infusion of trillions of dollars in new foreign investment, and the misguided policies of Freddie Mac and Fannie Mae all conspired to extend to millions of Americans lots of easy cash for inflated houses that they could hardly afford.
Owning a house was seen as a “right” rather than the just rewards of household sacrifice, delayed gratification and budgetary discipline.
Builders, lenders, realtors and bureaucrats all got in on the easy-money Ponzi scheme — until a few noticed that the emperor had no clothes and that rather pedestrian homes were hardly worth what unqualified purchasers had paid for them.
Financial hysteria followed when shaky borrowers began to miss exorbitant mortgage payments, walked away, and lenders panicked. The subsequent meltdown is history.
There is a similar pension bubble rising as well. There is perhaps as much as $6 trillion owed in retirement pledges to Americans, $500 billion in California alone. That tab under present conditions simply cannot be met.
For the last 30 years, politicians outbid each other to offer more lavish retirement packages to union members and public employees — more eager for their votes than for ensuring the payment of what they had promised. Receiving a generous retirement package was considered a right rather than an investment predicated on past savings coupled with modest interest and dividends.
There may already be an immediate $1 trillion shortfall in meeting what is owed current retirees. Pensioners on the receiving end are becoming more numerous, older and more affluent, while the younger workers on the paying end are becoming less numerous and poorer.
At some point, a city, a state or perhaps the Social Security system itself is going to announce there is no more money. Then, if there is not another financial crisis and Wall Street meltdown, the fantasy will end with workers paying higher contributions, retiring later and receiving less.
Then there is the higher-education bubble, as collective student debt nears $1 trillion with no guarantee that it will be paid back. Lots of poor college students and their strapped parents are floating huge government-subsidized student loans to pay for ever more costly bachelor’s degrees that no longer ensure that the recipients are either well educated, will find a job upon graduation or, if employed, will be better-paid than the vocationally trained.
Going to college has somehow become seen as a national right rather than a privilege predicated on superior academic achievement, financial sacrifice and continued academic discipline.
[…]
In other words, we are living the good life in the abstract that we have not quite earned in the concrete.
America is a naturally rich country. Unlike Russia, China, Egypt or Greece, it is stable, transparent, tolerant and free of civil strife. The result is that we are not doomed to see these bubbles expand and burst with the attendant social unrest. We need only return to our old American creed that wealth is created only with hard work and delayed gratification.
In other words, America must get back to producing real, rather than imaginary, riches and ignore pleasing rhetoric that masks unpleasant reality — the faster the better.
Read the rest: Bubbles Galore In Lives Lived in the Abstract
Tags: Victor Davis Hanson
