Facing the Future

            As I sat through my morning classes today, I looked around the room at my fellow classmates. Some will be future doctors, lawyers, business owners, teachers, accountants or entrepreneurs.  However, as America’s fiscal crisis becomes increasingly critical for all sectors of our society, I look around the room and see my fellow classmates facing the possibility of no job offers at graduation.

            The subprime mortgage crisis and the recession we are in have made for the most worrisome economic times in decades. What does that mean to me and my peers?  It means that I may not have a job when I graduate from college.  Not having a job will not be because I am not qualified or not able to perform the tasks, it will be because those in my field either are sticking around longer than expected because they have lost the money they planned on having for retirement, or simply that jobs have been eliminated because of budget cuts.   This goes for everyone in the job market.  Companies and employers are cutting back and tightening their belts because of the financial markets and their own financial situations.

            These difficult economic times may go on for several years. Several economists suggest that we haven’t hit the bottom yet, and recovery will take a longer, as opposed to shorter, amount of time.

One of the discouraging things about this crisis is the greed and stupidity that fueled it. Americans were spending money they didn’t have and buying homes they couldn’t afford. Lending institutions were making housing loans to people who couldn’t make the payments.

In an article from The Heritage Foundation, written by Ronald Utt, Ph. D., Utt referred to how the Congressional Research Service listed these characteristics of borrowers who might qualify for a subprime mortgage:

*Being behind on bill payment by 30 to 60 days.

*Judgment, foreclosure, repossession or charge-off within the last two years,

*Bankruptcy in the last five years.

*High probability of default

*And limited ability to cover living expenses after debts.

Yes, everyone has a dream to have their own home, but buyers and lenders need to be realistic. Lenders began to use mortgage products with a class of lenders that made them risky – probably more risky than many realized. People were purchasing homes they couldn’t realistically afford, and lenders were making loans that should never have been made.

Another big problem is the cost of energy. One of the biggest reasons for the increased cost of food is the transportation costs to produce and deliver it. Americans are energy hogs. We must decrease our dependence on foreign oil. We need to promote and reward conservation, and we have to develop alternative energy sources that are realistic and practical, not overly idealistic.

Skyrocketing health care costs are causing problems for pension funds and employers who provide health insurance as a benefit.

America’s national debt is frightening. The costs of the war in Iraq and Afghanistan have fueled this debt, and severely compromised our nation’s financial strength.  And, all of this comes in a global economy where countries with large populations can produce goods more inexpensively because employees will work for a lower wage.

            As the United States continues to deal with the national debt, housing crisis and the recession, things are going to get worse before they get better.  President-elect Barack Obama has a huge mountain to climb during his presidency.  He will need to balance calls for increased government regulation and increased federal spending with doing what needs to be done to fuel economic recovery. He will need to help boost confidence in Americans and their economy so people will look at spending money and making investments, as opposed to sitting tight and cutting personal spending. He will need to find a way to keep college available and affordable. What will happen to my peers who are seeing student loan opportunities dry up and face the reality of graduating with heavy debt loads and no jobs at graduation?

            The government can’t and shouldn’t bail out everyone, but what is different this time is the interconnectedness of everything. One of the best things to happen that could happen to all of us is to get lean and mean again, so we know what things actually cost and how we will pay for them as opposed to wanting something and going out to buy it with a credit card.

            We need to start with a blank slate on every federal and state program. Just because we have always done something doesn’t mean we should continue. Social Security might be a good example. It is only considered actuarially sound until the 2020s. The number of people paying in is going to be far fewer than those who receive payments. It is likely that I will never see a Social Security payment. Just because we’ve done it for a long time doesn’t mean it is a program we should continue.

            The crisis demands that we all look at our budgets and our spending. Being efficient and forward-thinking applies to all of us, from me the student to the largest corporation.  By taking action now, we can prevent the crisis from dragging on and making the situation worse.  But in order to do this, we as a country need to get our act together.

Work Cited

Utt, Ronald D, Ph. D..  “The Subprime Mortgage Market Collapse:  A Primer on the Causes and Possible Solutions.” 22 April, 2008. The Heritage Foundation. http://www.heritage.org

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