Borrow and Spend

There is a lot of talk in the news today asking how we got to where we are and I believe that I have a very good perspective on the answer. I was born in 1937 which puts me 10 years younger than the great generation who lived through the great depression and who fought and won WW11 and ten years older than the baby boomers who were born between 1946 and 1964. I see those who came before me as people who would save and invest and those who came after borrow and spend.
The concept of borrow and spend has remained with us and was magnified at the end of the cold war when the Berlin Wall fell in 1989. As President Clinton came into office in the 90’s the price of oil was falling, the price of houses rising, the dot com bubble was growing and every mail box was filled with new credit cards. As people saw their 401K plans growing and the houses increasing in value they took advantage of the easy use of multiple credit cards and went on a spending binge financed by the growing equity in their homes. This went on for almost 20 years and then came the day of reckoning and the raw reality of the hangover at the end of an all-night party.
The young folks who followed the baby boomers, the so called Gen Xers, expected to continue the life style of their parents and did so up until the big mortgage crisis hit and now they are in economic retreat. The days of starter castles are behind. No more imported marble counter tops and it is back to the basics starting with paying down debt. It may take a few years but most will come out of this a little wiser