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Posts Tagged ‘David Beim’

What a sad couple of weeks it has been here at Criticism As Inspiration.  I offer a sincere apology to all readers who visited our blog numerous times in the past couple of weeks, each time disappointed with our lack of posts.  But here’s a conversation starter…

Mirek Topolánek is currently serving as the prime minister of the Czech Republic (though he was ousted with a no confidence vote today…) as well as the president of the European Union.  Granted he is more right-of-center, he is very much against President Obama’s economic recovery plan.  I have not voiced much regarding this legislation, primarily because I don’t know much about it.  I desired change for American politics, but hiking up the national deficit is all too familiar.

What’s this?  The commie is upset about government spending and his beloved President Obama?  Yes, I am upset about the current state of the economy all over the world.  This is the perfect time to enact Plan “C”

WORKINGMEN OF ALL COUNTRIES, UNITE!

Of course I am being facetious.  I suspect that the market system has flaws, though I am convinced that neither Wall Street nor the big banks are solely to blame for our economic recession.  If you look at the chart below you will see that household (personal) debt in the United States has officially reached and surpassed our GDP:

debt2

I am not one for staring at charts (I’m more of a map kind of guy), but it’s rather easy to observe that our household debt has certainly been climbing over the past 25 years.  You can see it passing our GDP in 2007 and over the past two years it is continuing to climb.  What does that mean?  Who cares about our household debt in relationship to GDP?  What is most striking about this chart is that household debt has reached this level before.  Think 1929:

household

If you look at this chart you can see that last time American household debt was near 100% of our GDP was in 1929, followed by a rapid depression (which is called the Great Depression).  This gives us an interesting insight into a possible cause of the current recession.  Columbia Business School professor David Beim worded it well:

The problem is us.  The problem is not the banks, greedy though they may be, overpaid though they may be.  The problem is us…  We’ve been living very high on the hog.  Our living standard has been rising dramatically in the last 25 years.  And we have been borrowing much of the money to make that prosperity happen.

This is old news (I heard it on NPR almost a month ago), but bearing it in mind, perhaps we Americans ought to reorient the way that we see life (especially success, wealth, meaning, and fulfillment).  I’ve seen families living what would be considered “poverty-stricken” lives (according to information brought to light in this insightful post) while driving Escalades.  We’ve put ourselves in debt up to our ears (and climbing), and perhaps more borrowing ought not be our next step.  Maybe we ought to drive the cheaper, more fuel-efficient car.  Maybe we ought to eat out less and cook at home more.  Maybe we ought not purchase that big screen nor update our DVD library to Blu-Ray.  Maybe we ought not give Hollywood another record-breaking year.  I’m not sure where to draw the line, but smalls steps in the right direction would be a good start.

If we don’t choose change the way we live we will most certainly be forced to.

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