Weathering the financial crisis

Filed under: Work Life, In The News

red mom blue mom

Welcome to Red Mom Blue Mom, ParentDish's special coverage of the 2008 Presidential election. Each Tuesday through November 4, columnists Rachel Campos-Duffy (Red Mom) and Ada Calhoun (Blue Mom) will take on issues relevant to parents on both sides of the aisle. You can find past Red Mom/Blue Mom posts here.

Red Mom: Stop living a lie!
by Rachel Campos-Duffy

Suze OrmanI tried to boycott Oprah after she wouldn't invite Sarah Palin to the show, but I didn't last very long -- only three days, I think. So last week, back to my weekday ritual of watching Oprah while making dinner, I chopped vegetables while financial counselor Suze Orman ripped into a nice, middle-class couple who were in total denial about the state of their finances. Just as I began to wonder if these people would ever recover from this public lashing or venture out in public again, Suze turned, looked right into the camera and directed her words at all the home viewers who may be using credit cards unwisely: "Stop living a lie!" she yelled.

I thought a lot about Suze's words this past week as the nation's financial crisis unfolded. While many American families spent the week revising their budgets and preparing for leaner times, our "leaders" came up with yet another scheme to continue living the lie: a $700 billion tax payer-funded bailout that does nothing to reduce our $9 trillion dollar annual budget deficit. What a joke!

Common-sense Americans know that in government and families, debt is at the heart of this problem. Couple the de-stigmatization of debt with an American sense of entitlement -- "I deserve it!" -- and you start to see how we got here. The one thing the rich, poor, and middle class all have in common is a penchant for charging everything from clothes to family vacations. And on these trips, no one packs the minivan with a cooler anymore. It's drive-thrus and restaurants for America's most pampered generation.

In 1995, the Clinton administration expanded the "Community Reinvestment Act" in its eagerness to offer everyone, even those who couldn't afford it, a piece of the American dream. In exchange for boasting rights to a "more broadly shared prosperity," one of Clinton's favorite claims, the act incentivized high-risk lending practices to minorities and low-income communities.

Of course, I would like everyone to share in the American dream of home ownership, but Clinton's policy essentially offered a lie (they couldn't afford the houses!) and resulted in defaults that are the cause of our current economic woes. And while politicians on both sides of the aisle took campaign money from lending institutions, it was Democrats like Rep. Barney Frank, chair of the House Financial Services Committee, and Chuck Schumer, chair of the Joint Economic Committee, who criticized and voted against Republican legislation, co-sponsored by John McCain, that would have reigned in these dangerous practices.

During last Friday night's first Presidential debate, John McCain suggested a spending freeze on non-essential government expenditures in response to the crisis. He was widely mocked by the Democrats and the press for making this statement. But if American families must cut back and live within their means, why shouldn't we expect the government to do the same?

In a plea for a return to the concept of delayed gratification, Oprah sensibly asked her audience, "Remember lay-away? What ever happened to lay-away?" Indeed, bring back lay-away -- for Main Street, Wall Street and Washington!

Blue Mom: Bailing out the bullies
by Ada Calhoun

My favorite explanation of the U.S. financial crisis comes from Rachel Maddow. This bailout analogy casts Wall Street as a sugared-up child left with buckets of Halloween candy and no adult supervision.

It's perfect, because parenting is, in essence, regulation. How much do you get onto your kid to behave a certain way, and how much do you let him do what he wants? Do you step in and clean up his messes punishment-free, or do you make him reap the consequences of his actions?

There are kids on the playground where I spend a lot of the week whose parents are the disciplinary equivalent of small-government fiscal conservatives.

"You just gotta let it work itself out," they say, shrugging and going back to their Blackberries. "I told him not to snatch toys, but he just doesn't listen."

Meanwhile, their kid is running across the concrete with toy cars in every pocket and four in each hand, leaving a small army of weeping toddlers in his wake.

Of course, sometimes things like that do work themselves out. The preyed-upon kids get tougher and hold on tighter to their Tonka trucks. After a weekend at his old-school, no-nonsense Grandma's, the kid starts sharing. The hands-off parents are vindicated.

But sometimes, things don't work themselves out. Sometimes the kid grows into a sociopathic monster with no friends because he never learned how to be decent.

For the past eight years, the Bush administration has been the worst kind of laissez-faire parent, letting Wall Street and predatory lenders and oil companies and a lot of other grabby kids do whatever they wanted. And things worked fine, until they didn't at all.

Now all the good kids, bruised and battered and toy-less, have to break their piggy banks to help the bullies. The government has to step in -- we have to step in -- and insist on a higher standard of behavior, not just because we love our plastic fire trucks, but because we don't want to support a culture of greed, selfishness and fear.

How do you feel about the bailout?
It's the government's job to protect the economy.65 (14.0%)
My tax dollars shouldn't go to pay for Wall Street's mistakes.324 (69.7%)
I still don't really understand what's going on.76 (16.3%)

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AdviceMama Says:
Start by teaching him that it is safe to do so.