A dentist in Marin County once described to me the boomers in the 1970s who would come to his office with a cold sore on their lips and want a quick fix so they could go out the next weekend and enjoy the debauchery of the period.

He would tell them: "I can give you some medicine and it will take two weeks to mend your sore, or I can not give you medicine and it will take two weeks to cure it."

Today, we face a long recovery to an economic calamity that has been long in the making and will not be resolved with quick fixes. It will take time as well as a return to fundamental economic values. This is not about family values, but conservative — not political — personal financial values and wise public policies that favor savings over irrational debt, that give up short-term consumption for sacrifice, and that reward investment not speculation.

Some of our current woes can be traced to the fictional narrative portrayed in the award-winning television series "Mad Men," which captures the personal and professional drama of a New York ad agency in the 1960s. The show explains the transition from a culture of prudence to one of consumption.

"People buy things to fulfill their aspirations," explained Bertram Cooper, the senior partner of the agency to a junior account executive.

Monster houses, large cars, big TVs, lavish dinners, expensive bling and exotic trips became the goals of our culture, replacing the ideals of the 1950s, which emphasized thrift not spending, education over materialism, and investment not momentary pleasure.

Debt accompanied this trend. Bloated borrowing funded our aspirations as our savings rate dwindled to less than 1 percent. Why earn and save for something you want when you can borrow and get it today — even when you cannot afford it?

Our mortgage debt soared to $11 trillion and credit-card debt now stands at nearly $1 trillion.

At one time, home equity was a way to help educate your children or start a new business. Instead, it became a piggy bank for fueling the consumption of depreciating assets, such as cars, boats and trips overseas.

Of course, not all Americans followed the debt path: 23.8 percent of households have no credit cards at all and another 31.2 percent paid off their most recent credit-card bills in full, according to the Federal Reserve Board. The vast majority of households are not behind on their mortgage.

But these numbers do not represent the larger consumption pattern of too many Americans who are now riddled with debt, declining home equity and falling 401(k) accounts.

The government rewarded the consumption and debt feast by allowing the worst forms of borrowing, like rising credit-card balances, with no rational usury limits and deadly home mortgage loans with little or no equity required.

This laissez-faire attitude seemed to preach, "You can do whatever you want, because there are no consequences."

But the binge is proving that there are consequences, which fundamentally explains the current mess on Wall Street that fed the consumption fever with stupid deals, unlimited liquidity and obscene profits.

Nowhere was this more evident than in the housing market, where excessive fees were collected up and down the value chain on each and every transaction.

Plus, our institutions did not anticipate nor were they equipped to handle the looming problems.

"Making Sense of the Sub-Prime Crisis," a new research paper published by the Brookings Institution, concludes that market "participants" — lenders — did not anticipate such a large slide in home prices and, therefore, were not capitalized to cover their risk when the market fell so dramatically.

Nor was the government poised to help absorb the housing market blow, even though it has a big stake in the consequences because of its relationship with Fannie Mae and Freddie Mac and most other credit institutions.

Now, the government is expected to set up a new structure to absorb bad loans, similar to what was created during the savings and loan crisis in the 1980s. Then, it was dubbed the Resolution Trust Corp., which was created to liquidate the property that the government owned when so many S&Ls failed.

This new quasi-governmental agency will take the bad loans off of the banks’ books and begin a systematic liquidation of troubled mortgages while giving some homeowners a reprieve from foreclosure.

This may be a necessary short-term structural solution to the credit crisis, though there will be significant pain for all parties if we hope to regain economic values that favor savings over consumption and rational gains over greed.

Otherwise, we become like a codependent to a drug abuser, bailing them out every step of the way as they continue their dangerous ways.


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