Living Beyond Our Means

To the Editor:

For 23 consecutive months (and the only occurrence since the Great Depression), the savings rate has remained negative. People are living beyond their means assuming (hoping?) their future income will grow or their total wealth (home value?) will continue to rise regardless of their excessive spending. The major source of their funding is home equity loans. Since 2000, mortgage debt, as a percentage of personal disposable income, has risen from near 70 percent to greater that 100 percent. However, this excessive spending will soon be curtailed as house prices continue to fall (less home equity to tap) and interest rates on $2 trillion in ARMs from ‘04 and ‘05 are reset higher in ‘07 and ‘08 (mortgage payments are going up).

I have read the attacks on those favoring school budget cuts and as well as the verbal assaults on Herb Rosenthal, a very decent man who, in my opinion, puts in too many hours in a largely thankless job. But increased spending will not improve our schools unless it involves the parents and many parents delegate the job of raising their kids to the teachers. The discipline issues are too numerous to be discussed, but I will say they are not just in the high school — they begin in elementary and the problems just continue to grow. Do you think there is a correlation between irresponsible parents, excessive consumer spending, rising mortgage debt and the problems within our school system?

There is a difference between “want” and “need.” Many “want” every possible program, but in reality, we cannot afford it. We need higher productivity, improved focus on the essentials, less waste in the system, and parents held accountable for the actions of their children. Economics teaches some very harsh lessons to those who ignore it.

Mark Dennen

6 Old Green Road, Sandy Hook                                      April 16, 2007