Time for Offense?

David Leonhardt, writing in the NY Times, wonders if it isn't time to start playing offense:

At its core, the current crisis stems from two problems. Regulators, starting with Alan Greenspan, assumed that a real estate bubble couldn’t happen and that Wall Street could largely police itself. And households, struggling with incomes that haven’t kept up with inflation in recent years, said yes when those lightly regulated banks offered them wishful-thinking loans. No bailout can solve either problem.

I wonder how much of the current financial crisis is the result of America refusing to believe that the world economy is real, and that the days when we could just sit back and enjoy the benefits of being in the world's richest economy are coming to an end.

We have a government that believes that we can continue to cut taxes while not holding corporations accountable for paying their fair share - corporations that are making record profits - while at the same time borrowing against our future to continue to lavishly spend on pet projects while our infrastructure crumbles, our nation struggles in a healthcare crisis, wages are stagnant, and rising oil prices make the cost of goods and services soar ever higher.

On the consumer front, we went out and bought houses we couldn't afford, made available by subprime loans eagerly foisted on us by greedy banks and mortgage companies, while running up massive credit card debt to fill our huge homes with flat screen TVs and video game systems, all the while driving cars with $450 a month payments that average 15 mpg. Is it surprising that when oil prices and interest rates rose, we couldn't pay for the houses that aren't worth even close to what the banks lent? Or that we couldn't make our car payments or fill our tanks, or that so much of our income was dedicated to these items that when the cost of groceries and gasoline and flying began going up, we were out of wiggle room and default became an option?

From our government to our financial institutions to our citizens, we failed to prepare with an eye toward potential risk. What if things didn't stay rosy - what then? What's the plan? Am I positioned to absorb a moderate loss for the short term in order to preserve my future?

We're seeing the answer to that now. And it isn't pretty.