THE BLOG
03/23/2009 05:12 am ET Updated May 25, 2011

The Upside of the Downturn

Conservative pundits say we should feel the pain. Let the auto makers declare bankruptcy. If homeowners can't pay their mortgages, let the banks foreclose. Let the market decide. Let the weak die. The country has to be strong.

Emotionally callous, intellectual dishonest, the one modicum of truth in these statements is that there are stark realities to be confronted. We have been living beyond our means. We have buried ourselves in debt and false expectations. We are at the bottom of a sand pit. Unless we claw ourselves out, the sand will smother us.

We're told that the root cause of the crisis was the housing bubble. In the Clinton and George W. Bush's administrations there was a push to promote home ownership. For Clinton, this was the natural extension of the liberal idea that material advantages should be available to all levels of society, poor as well as rich. For Bush, putting more people into their own homes was good for business. Alan Greenspan accommodated by lowering interest rates, loosening regulations, and flooding the financial markets with cheap money. China facilitated the bubble by selling us affordable goods and propped up the system by investing in our debt.

Competition in the housing market pushed up prices which created equity, allowing people to buy what they couldn't really afford. The system worked well. We lived the way we believed we should. New cars, ever larger digital televisions, cool new cell phones... disposable income was fun.

When we elected Barack Obama as our president, we embraced his campaign of hope because eight years of George W. Bush and Dick Cheney had deadened our souls. Lies, misrepresentations, divisive politics, manipulated culture wars, hateful redefinitions ("healthy forests," "enhanced interogation techniques"...) had cut the country loose from its moorings.

America, it has frequently been said, is as much an idea as it is a place. Hard working, resourceful, dynamic, positive thinking, honest, democratic, generous, caring, strong, resilient, determined, expansive... That is America.

During the campaign, Obama offered a mirror that showed us what we wanted to be. Now that he is president he has the task of leading us to where we need to be. He tells America that the road ahead is difficult, that we will have to make sacrifices, that it will not be easy.

Now we are now at a crucial juncture. The world economy is threatened by deflation. Even resource rich Middle Eastern countries are feeling the pain.

Obama is trying to jump-start the economy with the stimulus package. He is trying to buy time for mortgage holders so they can avoid foreclosure. He wants to create new industries and markets to replace those that used to be our economy's mainstay but are now faltering.

The whole world is watching, hoping he pulls it off. And yet, we are not merely bystanders in this drama. We got ourselves into debt because we wanted what we wanted when we wanted it. Salesmen agreed with us that we should have a bigger HDTV for the Super Bowl. Banks wanted us to move into larger houses. Credit card companies flooded our mail boxes with pre-approved credit applications. Why wait to have your heart's content? Heaven has come to Earth in the here and now.

Today the new mantra is self-restraint. We may want a new digital camera, but can we afford it? What about a new car? Let's wait and see.

And yet we are in danger of scaring ourselves to death. Watch a day of cable news and you'll be afraid to leave the house. The economy is at risk of freezing over. Bankers don't want to lend because they're afraid people won't repay their loans. People are afraid of buying products because maybe they'll lose their jobs. Employers let employees go because they're afraid no one will buy their products.

Fear will endanger us as assuredly as unbridled spending did.

The new austerity doesn't have to be unpleasant. We can stop eating junk food and learn how to cook affordable, healthy food. We can buy what we need and resist the temptations created by huckstering salesmen. We can get back on track and prepare ourselves for the great challenges to come. The bottom line, we can't allow ourselves to give in to the enablers who would prefer us to see ourselves only as consumers and victims.

Obama will do his part. We have to do ours.