Nostalgia

There are some people who really seem to want to live in the 1930s. Perhaps they look at the old newsreels and feel fondly about the small town values they seem to portray, the lack of modern conveniences and the general good time feeling you see in a movie such as "Its a Wonderful Life".

Now I didn't live in that period, but from what I can tell, the people who did live during that period didn't really like it very much. Now, this was my parents generation, and as they aged, they did sometimes decry what had happened to the society related to morals and general changes. However, with very few exceptions, they certainly didn't want to return to the depression. In fact they developed habits that were designed to assure they would never have to live like that again.

Now, we have had another bad recession. This recession was clearly linked to a tremendous drop in real estate valuations. Of course, the drop was more dramatic in places where prices had escalated far out of proportion to sustainable demand, California, Nevada, Florida, Arizona. This is of course the very definition of a bubble and the bubble did burst.

Now, some look at this and have decided that the American economy and the way of life it has created is profligate and people need to be punished. Of course, many people have lost a lot, but in reality, some of these people who lost their homes, which they couldn't have afforded in a normal situation, are not really that much worse off then they would have been anyway. Those who own houses and haven't lost them, are somewhat restricted in how much they can borrow against their equity, but if they are still employed, they are not materially worse off.

Yes, there were many real and paper losses, but the losses are not going to be permanent. To some extent, the hand wringing over the Government policies to ease the pain and the dire predictions related to the debt we are running up, have some validity, but really as the economy recovers and the tax basis increases, we will see this level become less problematic as we see increases in tax revenues.