So, that V.P. debate was interesting. Of course many of the statements made by both candidates were stretches of the truth or altogether false. That is so frustrating. As I was checking up on all the facts I came across this gem:

Who Caused The Economic Crisis?
So who is to blame? There’s plenty of blame to go around, and it doesn’t fasten only on one party or even mainly on what Washington did or didn’t do. As The Economist magazine noted recently, the problem is one of “layered irresponsibility … with hard-working homeowners and billionaire villains each playing a role.” Here’s a partial list of those alleged to be at fault:

• The Federal Reserve, which slashed interest rates after the dot-com bubble burst, making credit cheap.
• Home buyers, who took advantage of easy credit to bid up the prices of homes excessively.
• Congress, which continues to support a mortgage tax deduction that gives consumers a tax incentive to buy more expensive houses.
• Real estate agents, most of whom work for the sellers rather than the buyers and who earned higher commissions from selling more expensive homes.
• The Clinton administration, which pushed for less stringent credit and downpayment requirements for working- and middle-class families.
• Mortgage brokers, who offered less-credit-worthy home buyers subprime, adjustable rate loans with low initial payments, but exploding interest rates.
• Former Federal Reserve chairman Alan Greenspan, who in 2004, near the peak of the housing bubble, encouraged Americans to take out adjustable rate mortgages.
• Wall Street firms, who paid too little attention to the quality of the risky loans that they bundled into Mortgage Backed Securities (MBS), and issued bonds using those securities as collateral.
• The Bush administration, which failed to provide needed government oversight of the increasingly dicey mortgage-backed securities market.
• An obscure accounting rule called mark-to-market, which can have the paradoxical result of making assets be worth less on paper than they are in reality during times of panic.
• Collective delusion, or a belief on the part of all parties that home prices would keep rising forever, no matter how high or how fast they had already gone up.

The U.S. economy is enormously complicated. Screwing it up takes a great deal of cooperation. Claiming that a single piece of legislation was responsible for (or could have averted) the crisis is just political grandstanding. We have no advice to offer on how best to solve the financial crisis. But these sorts of partisan caricatures can only make the task more difficult.

I agree with this wholeheartedly. There are multiple factors that caused this problem, and one swift $700 billion move from the government is not going to solve it. Everyone, and I mean everyone needs to be committed to turning this thing around. I’m not an economist so I don’t have all the answers, but I do have some insight as far as what we hardworking Americans must do to insulate ourselves from this sort of crisis: Stop borrowing money. Live on less than you make. Save for the emergencies. Save for the future. Forget about the Jones’ - they’re broke.

My sister just bought a house. A small one. Small by anyone’s standards, really. We thought she was nuts at first, but you know what? I’m a little envious! The layout of the house is great and has all the space she needs for her family of four. No more, no less. There are huge advantages to this, number one being that the cost is well below their means and will leave breathing room in the budget. Breathing room is an absolute must. The other advantage, the one that makes me so envious, is that her small space forces her to keep only the things she needs and say no to the rest. She has a built in defense against clutter!

It doesn’t matter what other people think. People may say my sister’s house is too small, or that mine is the junkiest on the block, but we don’t care! We can sleep at night not worrying how we’re going to pay next month’s mortgages. And more importantly, we are surrounded by family and friends who love us no matter what our houses look like.