Basic Economics

[Stu]

23 September 2008

Last week, Senator McCain created a stir when he stated the fundamentals of our economy are strong. The ensuing sniping and damage control were predictable but were either warranted?

If so, then what specifically is broken? If not, then why do investments banks hold billions in bad loans? Are the captains of Wall Street inept, criminals, or both? The answer hinges on our understanding of basic economics and ability to connect the dots over time.

Our economic foundation consists of several components.

1. The Executive & Legislative branches of our federal government establish fiscal policy to regulate commerce (Article I), establish a tax system and federal budget, direct government spending, and provide for regulatory oversight.

2. The Federal Open Market Committee (aka The Fed) establishes monetary policy to manage the supply of money, set interest rates, buy and sell government securities, designate deposit reserve levels, and establish the discount rate for loans from the Federal Reserve.

Fiscal and monetary policies balance each other to help provide stability in a dynamic economy managed and often driven by emotional humans.

3. The United States embraces a free market economy based on the socio-economic construct called capitalism wherein trade, industry production, and investments are privately controlled. Our economy often reflects the inverse and complex relationships between interest rates, bond yields, the value of the dollar on international markets, and the size of the federal deficit.

4. The American worker operates within this free market possessed with an entrepreneurial spirit and an understanding of hard work, risk and reward. At least, that’s the intent. A strong work ethic and a desire to invest, save, and spend is the norm and it is anathema to most white- and blue-collar American workers to expect a handout.

At their core, each of the financial crises since 1980 has not been caused by greed on Wall Street or in corporate boardrooms, although behavioral and regulatory improvement is needed. The proximate cause remains liberal social policies that have been allowed to morph into politically correct regulations that were then foisted upon our financial system by Congress and special interests. Specifically in this case, the federal government is responsible for mandates that banks provide home mortgage loans to those unqualified to receive them. And yet now many in Congress are attempting to displace blame to the President and Wall Street.

Senator McCain said this morning that we need more accountability and transparency. I agree. Only the emphasis should be on Congress, not Wall Street.


Stu McLennan
Harker Heights

[Stu]

25 September 2008

Bluto and Biden both got their history wrong.

“Over? Did you say "over? Nothing is over until we decide it is! Was it over when the Germans bombed Pearl Harbor? (Heck) no!” implored Bluto to a sullen Delta Tau Chi in a scene from the 1978 classic Animal House.

Senator Biden similarly chided President Bush this week for failing to address the nation about the current economic crisis. “When the stock market crashed, Franklin Roosevelt got on the television and didn't just talk about the princes of greed," Biden told CBS’ Katie Couric, "He said, Look, here's what happened.'"

The Stock Market crashed October 29, 1929, President Roosevelt gave his first Fireside Chat on March 12, 1933, and the television reached consumers in 1936. I suppose Farnsworth’s prototype could have been used to watch a presidential pep-talk in 1929 but observers would have wondered why Governor Roosevelt was giving it and not President Hoover.

And no one followed Bluto either.

Stu McLennan
Harker Heights

[Stu]

25 September 2008

“Soldiers under fire, MEDEVAC required!” rises to the level of a real crisis but the current economic situation comes close. Both however demand emotional control so that responses are appropriate instead of impulsive. This is especially true when solutions are generated in the crucible of a presidential election.

As usual, history helps put things in perspective.

Many are comparing the current situation to the Great Depression (1929-1939). There are similarities but there are also key differences. The Crash was in FDR’s rear-view when he took office, but he still inherited a financial mess; 25% unemployment; massive bank failures; a constricted money supply; excessive consumer and commercial debt; cheap credit; a significant trade imbalance; and reactive regulatory oversight. (Some of that sound familiar?)

To his credit, FDR immediately addressed the situation during his inaugural address delivered by radio on March 4th, 1933. Therein, he said some positive things worth noting.

• Encouraged Americans to have a spirit of optimism.
• Expected that frank and vigorous presidential leadership would be met with the understanding and support of the American people.
• Called for “strict supervision of banking, credits and investments [and] an end to speculation using other people’s money.”
• Issued an ultimatum to Congress; essentially, to lead, follow, or get out of the way.
• Warned that corrective action must not damage the underlying and (still) sound fundamentals of the American economy.
• Beseeched God for inspiration with which to guide the country.

But as all humans are prone to do, even President Roosevelt got a few things wrong.

• Placed the blame squarely on the financial sector, greed, and capitalism.
• Stated that social values were more important than monetary profit.
• Issued a call to “sacrificial living” to help the government-led recovery.

Arguably then, the seeds of our current situation were sown in the very solutions FDR instituted 70+ years ago; policies skewed heavily towards social programs and government solutions instead of those expected from, and provided by, the private sector.

Placing blame is not what is need now, regardless of how badly we want someone’s head on a pike. It is important however that we fix responsibility so that mistakes are identified, if not corrected. A few culprits deserve mention.

• Congress as a whole, both Democrat (1933-1948, 1953-1994, 2007-2008) and Republican (1949-1952, 1995-2006) controlled.
• Presidential administrations whose policies expanded government intrusion into financial markets including access to credit for the unqualified.
• The US Representative who, instead of slinking quietly into the shadows, now loudly lectures the President. This is the same guy who in 2003 dismissed the Treasury Secretary’s warning and was also a leading advocate of sub-prime mortgages to “the working class”.
• The US Senator who summarily dismissed the Fed Chief’s warning in 2005 as well as the Treasury Secretary’s again in 2006.
• Boards who proposed, stockholders who agreed, and CEOs who accepted, severance and retirement packages that reflected a disconnect between reward and performance.
• Political appointees responsible for restricting the level of appropriate SEC oversight.

Which of the above includes many of us?

Unfortunately, President Bush’s options are limited due to the realities of a global economy and levels of foreign investment. We may not like it but some short-term government intervention is probably needed, mainly to restore confidence.

Regardless of even good intentions, our financial markets do not function well when government injects itself in the equation other than to provide responsible oversight. Perhaps we should instead “take a knee”, tell Congress “Physician, heal thyself!”-- look it up, the context fits -- and turn to free market capitalists to frame a solution. Based on the meeting at the White House today, it’s worth a shot.


Stu McLennan
Harker Heights

[Stu]

26 September 2008

What if President Bush’s instinct was to avoid a government bailout and allow Wall Street to figure it out instead? What if he just needed a feasible way to depart from the path many expected him to take?

What if the $760 billion plan, White House Summit, congressional republican “revolt”, and presidential debate drama are all being leveraged to focus unwanted and unhelpful attention so that financial experts can address the situation without having to deal with the circus caused by Congress, the media, and pundits?

This morning’s headlines announced the FDIC seizure of Washington Mutual and JP Morgan Chase’s immediate purchase for $1.9 billion. This is a good thing but did anyone see that coming? This is Chase’s second recent major acquisition; the first being Bear Sterns for $1.4 billion and $900 million in stock.

The economic principle of “survival of the fittest” comes to mind. It too is a good thing in the long-run and applies equally to automobile companies, airlines, and investments banks.

Hmmm. The idea that the Executive Branch may even now be conducting a feint so that JP Morgan, Wells Fargo, Citigroup, HSBC, and investors like Warren Buffet can help resolve the situation sans media meddling and excessive government involvement is a very intriguing thought indeed.


Stu McLennan
Harker Heights

[Stu]

27 September 2008

It appears the even the Associated Press may “get it” and therefore it too deserves some credit.

Two articles -- JP Morgan’s buyout of WaMu has familiar ring and WaMu takeover called calculated risk - put our current economic situation in the proper historic and economic context. It is illuminating to compare the facts and thrust lines of both articles (see below) with the economic fundamentals listed above.

During the 1907 Bankers’ Panic, the stock market had plunged by 50% from the previous year. The economy was in recession, banks were pulling loans and restricting credit, speculative investments were failing, and a consortium was trying to corner the market on copper. There was no central bank to manage the money supply (read, inject liquidity) therefore the result was investor panic and a run on banks. The Treasury Department and Wall Street, led by JP Morgan himself, worked together to stabilize the markets. Of note, their main objective was to restore investor confidence.

The FDIC seizure of Washington Mutual last week was not a surprise. WaMu was “The Big One” because it held $14 billion in high-risk sub-prime (aka “toxic”) Adjustable Rate Mortgages. These loans were included in a total of $53 billion in ARMs and another $62 billion in fixed rate and other home loans.

The FDIC brokered the deal with JP Morgan Chase. The intent was to dissolve WaMu without cost to the FDIC or taxpayers. Good for Sheila.

WaMu’s acquisition by JP Morgan is “a high-stakes opportunity (read, investment) with minimal risk (read, private sector).” Jamie Dimon, JP Morgan Chairman, said the proposed federal bailout wasn’t a factor in the purchase. This tracks with JP Morgan’s stance that it was “acquisition capable” as far back as March 2007. Financial experts agree JP Morgan could take advantage of a federal "bailout" but doesn’t need to since it has the “…capital and strength to hold the assets and take the write down”.

JP Moran and other strong banks will prosper in the long run when stability returns to the market. Investors agreed as they bought $10 billion in shares yesterday in a “booming vote of confidence.” JP Morgan’s goal had been $8 billion.

JP Morgan intends to close only 10% of the 5,000 WaMu branches in 23 states. Obviously, that is good new for some 45,000+ employees.

What are the takeaways from this snapshot? That we should put situations in context historically; remain optimistic; refrain from panicking; and acknowledge that the government and free market capitalists are able to work together to solve economic problems. It’s also a good time to buy. Now, as then, short-term result may include economic contraction and recession but these are normal and cyclical for capitalist economies.


Stu McLennan
Harker Heights

[Stu]

2 October 2008

Events of the past week confirm that leadership is also fundamental to the economic and legislative processes when the goal is restoring market liquidity and investor confidence.

Democrats desperately wanted this presidential election to be about the US economy and not the war in Iraq. They got their wish; and a bag of chips too. The “buy-in” (aka “bail-out”) should have been assured given their majority in the House. So what happened?

Several factors need to be hammered home.

Instead of inspiration, we witnessed instead another partisan legislative meltdown, this time with global economic consequences. The President’s approval rating remains at 26% but Congress’ has now cratered at 17%.

Nancy Pelosi had the means to pass the bill without a single Republican vote but failed because her “Party First” agenda got in the way. “We delivered our end of the bargain” snapped Peolosi as she “congratulated” the 60% of her caucus that voted for the bill. As the onion was peeled, it became clear that she not only manipulated the process to increase the number of “no” votes – for potential political gain in November -- but remains wedded to the liberal ideology that leverages social and racial politics to effect economic policy and stifle criticism. The whole thing is odious. Dems would have demanded resignations if that had been done by the Republicans or military generals. Speaker Pelosi should resign.

Senator McCain was ridiculed for returning to Washington but at least he stepped up and tried. But not even the Maverick could dissuade his principled colleagues from doing their jobs and representing the views of their constituents. The system worked, albeit incompletely.

Senator Obama chose to absent himself from Washington, remain above the fray, “call it in”, and exert no visible leadership whatsoever. The Dems and mass media castigated President Bush’s leadership for his failure to return to Washington on 9-11 to "lead the country". BHO however was given a pass on returning to lead just his political party. How apropos that we have the opportunity to again take the leadership measure of this man in a non-scripted event just 30-days before the election.

The double-standard was nauseating but predictable. Partisans ignore reality and causal factors when the singular goal is political power. Country, in their case, does not come first as party, political power, and good intentions are deemed more important than economic viability and leader accountability. As in the past, where is the parade of victims to Capitol Hill? Where is the drumbeat for criminal investigations? The silence speaks volumes.

Political agendas aided by the media fuels the spin that seeks to displace the majority of culpability and responsibility from Congress to Wall Street. There is blame on both sides but Congress owns the proximate cause for this situation. Those factors are contained in the postings above.

There is a pony in this pile however.

Unlike the Economic Stabilization Act of 1970, the Emergency Economic Stabilization Act of 2008 was defeated because the American people filled the void and unleashed a tsunami on Washington. The 1970 effort proved unhelpful in the long-run because it injected the federal government into markets by establishing controls over wages, prices, rents, interest rates, and dividends and setting priorities for the use of oil. The Act of 2008 will result in similar government intrusion unless the compromise places most of the burden on Wall Street instead of Main Street.

Democrats chided Senator McCain about his inability to use computers but utterly miss the power of the Internet to expose the hypocrisy of Barney Frank et al. Only in a parallel universe could Dems hope to reverse the congressional and GSE records, Sunday talk show archives, and You Tube videos and shift blame to Republicans. Not even a submissive media can make those go away.

Lost in the melee was the news of the FDIC brokered Citigroup purchase of Wachovia’s banking operations for $2.2 billion. Wachovia, the US’s fourth largest bank, had roughly $53 billion in “toxic” mortgages that it inherited when it bought Golden West in 2006; which had in turn purchased them from Fannie Mae. If required, Citigroup will cover up to $42 billion of losses on these loans with the FDIC covering the remainder. Given the circumstances, that’s an acceptable deal for taxpayers. Like other recent FDIC brokered acquisitions, it could have been worse.

And finally, the list is growing of financial entities that needed to be culled; IndyMac, Federal Home Loan Mortgage Corporation, Federal National Mortgage Association, Lehman Brothers, Bear Stearns, Merrill-Lynch, Washington Mutual, and now Wachovia. This has been done, so far, with minimal and appropriate government involvement. It appears Congress will soon free itself from gridlock, and with that commercial credit markets, but there will be some short-term pain. The delay however may actually prove beneficial in the long-term.


Stu McLennan
Harker Heights

[Stu]

8 October 2008

The judicial branch has now joined the economic fray.

Wells Fargo and Citibank are in a legal battle over the purchase of all or part of Wachovia. Citi announced its intentions last Monday to buy Wachovia’s banking operations for $2.2 billion (see above) but then a judge upset that deal late Thursday with a ruling favoring a $15 billion deal offer by Wells Fargo to buy all of Wachovia……sans FDIC assistance.

“The agreement [with Wells Fargo] is in the best interests of shareholders, employees, creditors, and retirees, as well as the American taxpayer and it imposes no risk to the FDIC fund”, stated a spokesman for Wells Fargo.

No apparent argument there.

Undeterred, Citi has thrown down a $60 billion lawsuit against Wells Fargo for meddling and Wachovia for waffling. The outcome would be predictable if these were normal economic times - Fargo Wins. But they’re not.

The outcome of this case will send a message to both Wall Street and Main Street. Will the judicial system get sucked into the emotional cauldron or remain objective? Will the ruling favor the capitalist or government solution? At least the answer won’t be driven by news cycles.


Stu McLennan
Harker Heights

[Stu]

8 October 2008

Fairness – as in “evenly or equally divided” -- is not a fundamental of a capitalist economy. Americans however continue to allow partisan politicians and their media apparatus to spin it as such. And that is dangerous.

Since the Great Depression, the federal government has repeatedly injected itself into financial markets in order to achieve “fairness”. Democrats controlled Congress when all of the key legislation listed below was passed. Together, they eventually contributed in a significant way to the current mess.

In 1933, FDR’s New Deal leveraged the economic chaos to impose the will of the federal government through 15 pieces of legislation. Together, they were primarily intended to reduce unemployment. A few are listed below.
• The Agricultural Adjustment Act imposed taxes and implemented subsidies and production controls intended to limit supply and thereby increase revenues and restore the purchasing power of farmers. This construct, called “parity”, was deemed unconstitutional by the SCOTUS in 1936.
• The Economy Act can be cited as precedence by those who believe paying taxes is patriotic. This Act cut government salaries and veterans pensions by 15% and government departments by 25% -- a total of nearly $1 billion -- in order to showcase FDR’s “conservative fiscal policies”.
• The Tennessee Valley Authority Act can be cited as precedence by those who believe in the formation of federal corporations; a term that should be an oxymoron. This Act was intended to “invigorate” the economies of both the Tennessee Valley and United States but in reality foisted energy, agricultural, social, and environmental agendas on the public.
• The National Housing Act created the Federal National Mortgage Association. This organization would later become known as Fannie Mae, and we know where that takes us.

FDR continued to “improve” the New Deal during his administration to include; empowering labor unions; forming a Works Progress Administration to oversee the largest government employment base in the country (3.3 million); and initiating the Social Security program.

Congress responded to the SCOTUS ruling in 1936 by passing the Agricultural Adjustment Act of 1938. This was followed over time by the Agricultural Adjustment Act of 1949, the Food Security Act of 1985, and the Federal Agriculture Improvement and Reform Act of 1996. Together, these bills cemented federal programs that today pay farmers to limit output, manipulate crop yields, and divert harvested products to other uses (e.g., bio fuels).

The Federal National Mortgage Association Charter Act of 1954 established a secondary market for residential mortgage sales, reorganized Fannie Mae, and created the Government National Mortgage Association (aka Ginnie Mae). The intent of the secondary market was to make mortgage funds more available throughout the nation, especially to those with low- and moderate incomes, instead of depending on just local banks and savings and loans associations.

President Johnson declared “war on poverty” via the Economic Opportunity Act of 1964. This dramatically increased federal programs to meet an invented constitutional requirement for government to provide the poor an opportunity to “earn a decent living and maintain their families in a comfortable living standard”.

The Housing and Urban Development Act of 1965 created a rent supplement program for those living in public housing; expanded Federal Housing Administration mortgage insurance coverage to those wanting to buy homes; and divided the secondary mortgage market between Fannie Mae and Ginne Mae.

The Emergency Home Finance Act of 1970 authorized Fannie Mae to purchase conventional mortgages and created the Federal Home Loan Mortgage Company (aka Freddie Mac).

The Community Revitalization Act of 1977 mandated that commercial banks receiving FDIC support meet the needs of borrowers in their communities, specifically low-income, inner-city, and minorities. The CRA was refined by the Financial Institutions Reform & Recovery Enforcement Act of 1989 (that instituted a bank rating scheme) and the FDIC Improvement Act of 1991 (that made these ratings public record). The combined results proved to be the main legislative cause for our current economic situation.

The Housing and Community Development Act of 1992 expanded the ability of Fannie Mae and Freddie Mac to provide mortgages to low income borrowers.

The Community Development Banking and Financial Institutions Act of 1994 created community development financial institutions (CDFIs) that required banks to invest themselves more heavily in the economic development of communities they serve.

And we could go on, and on.

There are several important lessons we should learn.

First, that government meddling and regulatory sloth is mostly to blame for the current economic mess. It’s penchant for overstepping the functions enumerated in the Constitution and intruding into the private sector is rooted in social and economic philosophies that seek to punish the engines of economy, redistribute wealth, and achieve an egalitarian society. This is called socialism; the polar opposite of capitalism. We can’t have both.

Democrats bear the bulk of responsibility. The magnitude of their malfeasance as a party should impact their viability as a political force. They need to change course and put Country First.

Americans need to learn from history. This situation didn’t happen overnight and will take time to resolve. We refused to respond to reason and now have no recourse but to respond to pain.

And lastly, while there is certainly room for improvement in regulatory oversight and corporate decision making, we must assume personal responsibility for allowing our elected reps to run amok in Washington DC. Unless we take corrective action during the upcoming election cycles, our children will face a similar economic fate in the future.


Stu McLennan
Harker Heights

[E.W.]

Do we just wonder if Obama and the liberal illuminati are saying what people want to hear with so many of these economic policies? Are some of the things that he saying really doable? McCain isn't giving me much to like right now but what he does say i think is a bit more believable.

[blondegenes]

Obama's past political associations are so very important for the health of the U.S. economy.
That's why he lied/denied his association with ACORN as a trainer/organizer on his FightTheSmears
site, and why he tried to "scrub" several years worth of documents/news articles on the internet, which
the Cleveland Leader found (Google Cleveland Leader, Obama, Acorn)
and, in his Columbia class of 400 NO ONE remembers him.

The whole agenda of ACORN and its 70s radical founders, is to follow hardcore NeoMarxist, Saul Alinsky's,
"Rules for Radicals" (which instructs leftists to "sell "change"")[/b]ell and
The Cloward-Piven Strategy of Orchestrated Crisis, Rev Wright, the New Black Panthers,
The Nation of Islam, etc.,
http://www.americanthinker.com/2008/09/barack_obama_and_the_strategy.html
agenda has been all along, since the 70s, [b]to overburden the U.S. economy to cause it to collapse
which they accomplished with ACORN, Fannie Mae, Freddy Mac, unsecured mortgages/unsecured credit crisis.
And, Warren Buffett said, just a few weeks before the Presidential election, that, even with the subprime mortgage/
credit crisis, he couldn't figure out what was happening with the Stock Market, because the fluctuations
were "unnatural" (his word), the market was being manipulated.
Which can probably be attributed to Obama supporter, George Soros (Moveon.org owner and Media owner)
99th wealthiest leftist in the World, famous for the breaking of the Bank of England on Black Wednesday.
Socialism cannot be introduced into Democracy in theses Marxist theorists views,,it can only happen, in their
estimation, when the U.S. economy has collapsed.

Sounds familiar now, doesn't it?
You've been had!

And, now that the World, via the internet, knows that the U.S. Presidency was purchased by a guy of
very questionable citizenship status/birth status, we are sitting ducks for every nutjob terrorist on Earth.
This is "the change" we don't need, don't want, and you can keep it!

It is never too late;
Stop the Obama Constitutional Crisis petition;
http://www.rallycongress.com/constituti ... al-crisis/

Resist Obama Nation petition;
http://www.grassfire.org/111/petition.asp?pid=18651528

[Stu]

18 March 2009

Separating the wheat of economic principles from the tares of political spin remains a challenge for many Americans, one exacerbated by a duplicitous liberal media.

When asked by a reporter on March 15, 2009 about the economic pain and hardship being experienced by American families, President Obama responded “[If] we are keeping focused on all the fundamentally sound aspects of our economy, all the outstanding companies, workers, all the innovation and dynamism in this economy, then we’re going to get through this. And I’m very confident about that.”

On cue, Larry Summers, Paul Volcker, Christina Romer, and Timothy Githner appeared as rays of sweetness and light sounding similar notes of optimism regarding capital stock, technology, workers, etc.

When asked to explain the disconnect, why candidate Obama had excoriated his opponent for saying the same thing on September 15, 2008, a White House spokesman wryly noted “He (McCain), lost the spin war on that one [and] that’s why we’re here.”

Ms. Romer simply deflected criticism during an appearance on Meet the Press by saying President Obama’s comments had been misconstrued. Oh, OK, never mind.

No one, not even McCain, has yet bothered to define what constitutes the “fundamentals of our economy”. The only component that has been mentioned so far -- American workers – is great but there are more. See above.

In fact, this administration sees “opportunity” for democrats to solidify political power by leveraging the convergence of a cyclical recession and needed process reforms in US economic and government policies. The stars have aligned.

Democrats also view this “economic war” – or “opportunity”, depends on who is speaking – as a perfect time to push government as the answer and to ram an astounding agenda of spending, education, health care and environmental “reforms” down our collective throats in the form of a $787 billion economic stimulus bill and a $410 billion spending bill that includes mortgage “rescue” and unemployment “benefits”.

Several governors were wise to reject pieces of this government largesse since doing so for short-term federal gain would have incurred long-term state costs. Democrats and the liberal media, of course, then loudly chastised them. But then, at least the governors weren’t encouraged to either take the money or commit suicide.

When will this insanity end? When segments of our population learn to accept responsibility and separate fact from spin. Either that, or the Second Coming.

Stu McLennan
Harker Heights

[Stu]

April 29, 2012

The Dot-Bomb aneurysm of 2001 was a significant blow to the global economy, and another is forming. The caustic public sector debt levels in America and Europe have been front-page news for years yet a cancer is growing primarily in America – personal debt.

Many pols continue to ignore the warning signs and gleefully leverage federal agencies and programs - for political gain - by expanding public sector debt and consolidating private sector debt at the federal level. The Wall Street and automobile industry bailouts are two examples of the latter. Doing this with personal debt however allows individuals to avoid responsibility and invites additional economic ruin when, not if, this bubble bursts.

In 2008, the Executive Branch placed the Federal Home Loan Mortgage Corporation (aka Freddie Mac) and Federal National Mortgage Association (aka Fannie Mae) under federal “conservatorship” – a euphemism for takeover - and these institutions coupled with unwise congressional mandates remain at the core of the sub-prime mortgage train-wreck. The Democrat Party’s penchant for instigating class warfare and insisting on “fairness” resulted in policies that penalized financial institutions for not lending enough to “main-street”, including the grossly unqualified. We know what happened and that taxpayers were stuck with the $360+ billion bill.

In 2011, the Student Loan Marketing Association (aka Sallie Mae) began consolidating $28 billion in federally guaranteed college loans, mainly from the Citigroup-owned Student Loan Corporation. This allows Citi to write-off these loans, many of which would arguably not have been repaid. The President has recently floated a trial balloon to see if it’s politically feasible to forgive student loan debt, no doubt in hopes that grateful recipients will vote appropriately. Again, the results will be destructive and taxpayers will be stuck with the mess.

Total personal debt in the US is now $2.43 trillion. The average consumer debt load is $210,236 including a mortgage ($173,876), credit cards ($15,799) and an auto loan ($15,504). The average college student graduates with over $20,000 in loan debt. The warning signs are obvious but we collectively must care enough to stop the madness.

I began writing this last month and, as in on cue, the President and Congress this past week were locked in an election-year battle over increases in student loan interest rates. As with Medicare and Social Security, it’s past time to make tough choices and reduce/eliminate entitlement programs. Either that, or additional financial chaos is guaranteed to follow.

Stu McLennan
Harker Heights