I believe that the consequences of an “over-entitled”
society are increased irresponsibility by its citizens. This is the credo of our mini-series on
welfare in America. Over the week (and
perhaps sporadically in the future), we will examine the effects of welfare in
America. Why worry about your health or
finding an affordable health insurance provider when the government is going to
take care of it? Why find a job when the
government is going to continue to pay you not to work (we’ll look at this on
Friday)?
Today’s question: Why pay for your mortgage if the
government is going to freeze foreclosures?
Use that money for important things like spas, mall runs, and liquor.
CNBC, the Calculated
Risk Blog, and more recently the Iowa
Independent all featured the story of one distressed homeowner who sought
help from President Obama’s refinancing program. This homeowner gave up their mortgage to go
to the mall, Best Buy, Home Depot, Sears, the liquor store, and premium cable
services. The total bill was between
$1,700 and $1,800.
While many would argue that these cases are rare, one must
ask, “where are the recent consumer spending increases coming from?”
On May 14th, the
U.S. Commerce Department announced that retail sales had increased for the 7th
consecutive month. Where is this new
found wealth coming from? Consumers were
over-leveraged before the recession. Our
employment situation has not really improved.
Hourly wages aren’t that much higher than they were in 2008.
The only explanation, in my opinion is a shift in
priorities. It can be seen in the
reduction of consumer credit card debt, the increase in retail sales, the
slight increase in consumer spending, and through all of this, an increase in
foreclosures. While many may argue that
the above example is an exception, I disagree and Calculated Risk agrees with
me;
“I’d like to say this
is the exception, but it’s much closer to the norm. Many people who request
HAMP modifications submit bank statements that demonstrate little if any
“belt-tightening” going on.”
Like I’ve said in the past, this appears to be an issue of
financial education and responsibility as opposed to a systemic issue. Then again, why get your financial house in
order when the federal government can’t seem to either? We’ll have to see how many more outrageous
applications like our example come out before the rest of the American public
gets it.
