U.S. overspending to blame for crisis

Normally, finance bores me. But when the AJC, USA Today and the New York Times all started screaming “Dow plummets 777 points!” this Tuesday, even I felt like I had to care. I picked up a paper and before I knew it, I was sucked into a world of credit-default swaps, collaterized debt obligations and all kinds of things I never wanted to know about.

The crisis turned me into a financial news junkie overnight. I started checking news feeds in class and devoured any article and commentary I could find, slowly reading myself into a coma. I won’t dwell on the mind-numbing details, but I did come to three conclusions: 1) My head hurts. 2) We’re screwed. 3) Did I mention my head hurts?

Apart from the splitting headache, I would say the spectacle on Capitol Hill this week was almost entertaining, if the fact that people are losing their jobs, homes and entire life’s savings because of it wasn’t so completely unfunny. For those who missed it, here’s a quick recap of events:

1) The House cobbles together a $700 billion bailout plan that everyone hates but most agree to vote for.

2) Angry emails crash the House website while equally angry phone calls jam the switchboards—everyone threatens their Congressmen with political death if they vote for the bailout.

3) McCain dramatically puts his campaign on hold and flies in to D.C., promising to deliver his party’s votes.

3) Congressmen are afraid to lose re-election, despite McCain’s badgering (two-thirds of Republicans voted against the bill), and the bill fails 228-205 (the Obama camp secretly rejoices at McCain’s failure but doesn’t propose any meaningful solutions).

4) Wall Street suffers a 777-point drop and the finger-pointing begins.

5) People watch their 401(k) accounts go down the toilet and start screaming bloody murder at their Congressmen again, but this time for not voting for the bill.

6) The Dow recovers 485 points on Wednesday in hopes that the bailout will still pass.

7) The Senate revises the bill to make it more popular, throwing in $100 billion in tax breaks and upping the limit for insured bank deposits to $250,000—and as of Wednesday night, the country was waiting in breathless anticipation for a Senate vote.

The main problem in this bailout fiasco, as far as I can tell, is lack of communication. Nobody bothered to explain to the public what the bailout bill was about or why it would help them. It seems like everyone heard the word “bailout” and took it to mean a bailout of the evil Wall Street executives, investors and banks that got the country into this mess in the first place.

“No free ride for Wall Street! Bail out people, not the banks!” ran the protest posters outside the New York Stock Exchange on Tuesday. All this happened while stocks crashed, debt grew, credit tightened and the economy got worse for ordinary people. Congress stood up to Wall Street, alright, but the House’s decision only created more panic—panic that the Senate is trying to counteract by resuscitating the bailout.

Of course, there are no easy answers for the crisis, and while the necessity of the $770 billion bailout is questionable, it is definitely time for some tough decisions. As much as we all hate Wall Street big shots who raked in millions playing with other people’s money, Wall Street didn’t do this by itself. Americans are in debt —mountains of credit card debt, student loan debt, car debt, mortgage debt, etc. The country is in debt—over $10 trillion, by the way.

The truth is, we’re all over-leveraged, and we’ve all borrowed too much money. People in this country have been living beyond their means for years, and this time it has caught up to them in the form of defaulting mortgages, which triggered the investment bank crisis. All of a sudden, no one could pay and every stockholder wanted out: the banks crumpled.

Yes, people need a bailout, but they should start by bailing themselves out. Don’t eat out every night, stop overcharging credit cards and actually pay the full amount of debt every month. And oh yeah, about that gas crisis—we have enough gas, but people keep panicking and topping off every spare minute they have—so stop topping off your gas too.

Otherwise, in everyone’s scramble to get more than they need, we all might just end up with nothing at all.