I don't believe that anyone is asking you to feel sorry for anyone - individual or corporation.
However, I think that your belief that being frugal is a guarantee for all to be well. I hate to burst your bubble but the average family has lost 40% of their net worth since 2007 and the vast majority of that is due to the drop in home values (70% of the drop in net worth). It is finding yourself with the pay check you had in 1992 - but with the bills and debt that you have today. No matter how frugal you have been or how well you have saved, you might have a little difficulty in making payments on your home.
As for people buying too much home, the American approach to real estate has been to use a Real Estate Agent (paid by commission so the more he/she gets you to buy the more he/she makes) who then goes to a Mortgage Banker (paid by commission so the more he/she gets you approved for the more he/she makes) and subordinated by a Real Estate Appraiser who is paid directly by the mortgage banker. I think that we can all see that the process is not designed with the consumers best interest at heart - it has dollar signs all over it and none of them are for the buyer!!!. This process has a significant contributing factor to the real estate bubble. However, for all the new rules in Dodd Frank (500 of them in this bill alone) there is nothing to change this process of mortgage lending. Shame on both Dodd and Frank for failing to address this basic flaw in the system.
That being said, if you are frugal and bring 20% down plus the closing costs, on the purchase of your $200,000 home in early 2007, that house dropped in value by 35% by 2010. So you end up with a $160,000 (less payments to date) mortgage on a house that is worth $130,00. Oops, you too, are underwater.
As for work and savings being what made this country, it did not. If you look at the history of our economy it was built by growing our businesses, expanding our markets, and making new and better products. The vast majority of our wealth was generated by companies appreciating in value - not putting money into savings accounts.
I do agree that the suppression of interest rates is a short term fix and is to the detriment of the long term recovery of our economy. Think about it from the stand point of the 15% of our population that is retired. Their income is derived from interest income. As interest rates increase their spending power and their ability to reinvest in our economy goes up.
I also agree that both Republicans and Democrats are equally to blame for the current financial fiasco and neither party has the ability or the backbone to make the changes necessary to head our economy in the right direction.
