Economic Crisis
The world wide economic meltdown is hurting people in all corners of the globe. Here at iRentu2, although we are not immune to the pain and uncertainty many of you are experiencing, we believe that we are in a unique position to help. 
On Forbes.com the other day, Nouriel Roubini, an economist at the Stern School of Business, wrote an interesting article titled The United States of Ponzi that really gets to the core of what brought us into this colossal mess.
“Americans lived in a “Made-off” and Ponzi bubble economy for a decade or even longer. Madoff is the mirror of the American economy and of its over-leveraged agents: a house of cards of leverage over leverage by households, financial firms and corporations that has now collapsed in a heap.
When you put zero down on your home, and you thus have no equity in your home, your leverage is literally infinite and you are playing a Ponzi game. And the bank that lent you, with zero down, a NINJA (no income, no jobs and assets) liar loan that was interest-only for a while, with negative amortization and an initial teaser rate, was also playing a Ponzi game…
…A country that has–for over 25 years–spent more than income and thus run an endless string of current account deficit–and has thus become the largest net foreign debtor in the world (with net foreign liabilities that are likely to be over $3 trillion by the end of this year)–is also a Ponzi country that may eventually default on its foreign debt if it does not, over time, tighten its belt and start running smaller current account deficits and actual trade surpluses.
Whenever you persistently consume more than your income year after year (a household with negative savings, a government with budget deficit, a firm or financial institution with persistent losses, a country with a current account deficit) you are playing a Ponzi game. In the jargon of formal economics, you are not satisfying your long-run inter-temporal budget constraint as you borrow to finance the interest rate on your previous debt, and are thus following an unsustainable debt dynamics that eventually leads to outright insolvency.”
In short, he is saying that a large percentage of American businesses, governments (local, state, Federal) and people have spent money in an economically unsustainable manner.
Further, implicit in his Ponzi analogy are the gross ethical lapses that poured fuel on the unsustainable spending fire. How else could a mortgage broker close their eyes and sell a NINJA loan, in the understanding that they would pass the risk onto others, while they get paid immediately and therefore didn’t care. Or the ethical lapses of those in Congress that essentially created the market for these loans by directing Freddie/Fannie to purchase them, all with the lofty intent of increasing homeownership rates (ie. buying votes for reelection). This without even mentioning the ethical blind spots of numerous Wall Street banks, credit rating agencies, regulators…
Lastly, he mentions the current account deficit, which in non-economic jargon means that the US purchased more goods & services from China, than China did from the USA. This deficit was made up by the US borrowing money from China in the form of US Government Securities, which will have to be paid back through higher taxes or inflation.
This outsourcing of our production of consumer products to China has had a highly detrimental affect on the Environment. China does not maintain the high environmental standards that we do here in the US. So as they rape the Chinese environment, with the common man wondering when they will see the sun again (the sun is often blocked due to the tons of pollution in the air), we sit back, breathing fresh air while enjoying the fruits of other’s suffering. Additionally, think of all the fuel burned to ship the raw materials to China for processing and then even more fuel burned to deliver the finished consumer goods to the US. All of which added together, leads to a long-term approach to fulfilling our consumer wants in an environmentally unsustainable manner.
Renting on iRent2u can lead to the fulfillment of our consumer needs and desires in a financially sustainable manner. Instead of going further in debt to purchase something, come find it on iRent2u. Think of how many vacation homes were purchased on crazy debt in the last 6 years that are only used once per year. If you are only going to use a large ticket item once or twice a year, rent instead of buy, it is the economically sustainable route to take,
Instead of selling mortgages to those without jobs, credit history and savings, or leveraging yourself to the verge of financial oblivion to purchase and flip that last vacation home, join the growing iRent2u community and thereby earn more from what you already have. iRent2u is an ethically sustainable course of action.
Arguably, we have all of the consumer goods from overseas that we will need for the next 5 years, if we are willing to lend them between each other. If we buy less and rent more, we can make a new start, in an environmentally sustainable direction, all done without compulsion from our fearless leaders in D.C.
We as a Nation will climb out of the hole we have dug ourselves when we accept responsibility and begin to approach life with environmental, ethical and financial sustainability top of mind. Here at iRent2u, we are happy to help lead the way.
Popularity: 11% [?]
Loading ...