September 16, 2008
The collapse of Lehman Brothers is the latest in a series of financial lessons.
There is an old Puritan ethic called "living within your means." In modern times the idea of Puritans and being "puritanical" have come in for much satire, even derision. But it is a fact (just as it is a fact that abstinence is the best practice for avoiding unintended pregnancy and STDs) that living within one's means is the best way to avoid financial calamity.
Too many have ignored this ethic and bought houses they could not afford and their salaries would not support. Too many lending institutions were happy to lend them the money out of a misplaced faith that home prices would escalate without end. They thought the federal government could always bail them out. That would be understood in the Puritan era as greed. Many are now paying the price for their greediness and failure to live within their means. We should not fear failure. It is often an excellent teacher if one is open to being taught.
In an election year, I fear that Congress may stupidly try to buy votes by bailing people out, especially in swing states. Let’s hope not.
Cal Thomas is a nationally syndicated columnist based in Washington, D.C.