by Stoneheart

Created on: February 08, 2009   Last Updated: February 09, 2009

Difficult to explain in a few words is the cause of the economic crisis that started last year and seems likely to continue for way, way too long. The best that come to mind, human nature. In 2006, business took me to some relatively new neighborhoods in a California city that has one of the nation's highest foreclosure rates. I spoke with people living in $400-500,000 homes. They had recently relocated from poor urban neighborhoods, where they lived in apartments or houses subsidized by public funds, Section 8 housing. Each of the new home had the latest huge-screen TV, very few pieces of furniture and blankets or sheets being used as window curtains. Because I'd lived and worked around the world for years, I hadn't owned a home in the U.S. in over 20 years. I couldn't understand how any of the families living in these homes could afford to pay for them; few of the adults were employed and those who were employed had relatively low-wage jobs. When the foreclosures started and I read that homes could be "bought" without any down-payment or without any verified income, I understood. When I was a little kid in the 1950s, my father bought a new car every two years, with cash. The trade-in value paid for most of the new car's price, around $2500 for a new Oldsmobile. Money saved over the two years covered the rest. He and my mother made other relatively high-priced purchases, like a dishwasher and a color TV, after saving money so they could pay cash. Sometimes they'd make lay-away plan payments. In 1974, I discovered car leasing and was able to drive a Porsche 911 that cost $13,900, which was around $600 more than I was making a year teaching at a high school. For around $180 a month for three years, how could I not say, "Yes!" to the salesman? My father lived through the Great Depression, right after he graduated from college. He believed that only a home should be purchased, "on time." He sure didn't think leasing the Porsche was very bright. His father, a grandfather gone before I was born, was a bank manager and certainly would not have approved what I did. He probably would have considered leasing anything irresponsible. When I sold BMWs in the late 1970s, four-year leasing started and car loan terms were up to 60 months. Lengthened terms were the only way car prices could be increased, the only way most people could afford to drive a $25,000 7-Series BMW. With a 24-month lease term, the payments would have been around $800 a month, not much less than what

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