Armchair Dictator

Each Tuesday morning during the National Football League's season I have read Tuesday Morning Quarterback by Gregg Easterbrook on ESPN.com's Page 2. Easterbrook opines about the week in football and has some commentary on most of the games.

There are some fun themes that he carries throughout his column, but Easterbrook also finds time to weigh in on current political events. He's also a contributing editor for The New Republic, The Atlantic Monthly and The Washington Monthly, so he's not just a sports hack (he's a political hack too!) Still, I find some of my semi-current political news in his weekly sports column. Many of his observations there are humorous to me.

His recent comment on the subprime mortgage crisis were especially amusing to me. Easterbrook observed that recent comments by columnists and politicians indicate that those who signed adjustable-rate or interest-only mortgages were not to blame for their decisions. An excerpt of his column from today:

"If you sign something that allows you to live beyond your means for a few years, and seems too good to be true, in what sense are you not responsible for that decision? Last week on a local newscast, I heard a woman who had signed a gimmick loan, and now was in danger of losing her house, say, "The broker told me it was no problem because if interest rates went up, I could just refinance." We would not take seriously someone who said, "The broker told me it was no problem because if interest rates went up, I could find a bar of gold on the sidewalk." If interest rates went up, so would refinancing rates; the way to lock in a low mortgage rate was to buy only what you could afford and sign a conventional fixed loan. People who didn't do that, preferring a promise of something for nothing, are now complaining they should be bailed out."

Easterbrook also cites Anthony Downs, of the Brookings Institute, who notes that overall the credit crisis is way overblown. Still, these are writings of a political columnist and an economist (and from a macro perspective, at that). Obviously, we everyday people feel a pinch in many ways.

Subprime lending is a least partly to blame for the meteoric rise in home prices that made it so hard for many young families to purchase their first home. Now that home sales have slowed down those who sell real estate are suffering. Also, while national averages indicate healthy property values, certain specific regions do have declining property prices. Obviously, the issue is multi-faceted, and is of interest to me because my wife and I essentially took the wisest approach when we bought our home: we found a house that we could actually afford and got a low, fixed-rate traditional mortgage through the FHA.

I do not wish to sound smug or self-righteous, I simply would like to add my voice to the side of prudence and moderation. Sometimes the boring and patient approach really does pay off, and if more people acted in this way, some problems could be avoided. I've made my share of rash financial decisions, and I can say that there are times that I wish I had been more patient or more content to live within my means.