Main Street is also accountable for this crisis

The deepening financial crisis is increasing everyone's stress — and their finger-pointing.

The deepening financial crisis is increasing everyone’s stress — and their finger-pointing. Blame is being placed on the nation’s banks for having made too many risky loans and on financial engineers for concocting an overly complicated financial system.

Blame also is being heaped on too tightly interdependent global financial markets, weak government regulation and the once all-powerful Alan Greenspan, the former Federal Reserve chairman and godfather of free markets and minimal government interference.

“Hold Wall Street accountable!” investors are screaming. After all, wasn’t it those swaggering traders and obscenely paid executives who put greed above principle and created this mess?

Investors — as well as the unemployed and jittery workers — are mad as hell. And who can blame them for pointing fingers?

But even after holding Wall Street, banks and the government accountable, the people who are complaining should look in the mirror. To paraphrase the old Pogo cartoon strip, “We have met the enemy, and to some extent, he is us.”

The American public must take responsibility for its own financial actions, as well as for helping to dig the hole we’re now in. The fact is, American consumers took on too much debt.

Sure, our nation’s major institutions — big banks, big business and big government — must find ways to tighten their collective belts. But so do individuals.

We’ve got to kick our habit of keeping up with the Joneses and learn to live with — and enjoy — living with less. In fact, the current financial crisis can be viewed as a sort of fiscal cleansing. Granted, it is a kind of cold-shower way to learn fiscal responsibility, but sometimes cold water is the only thing that does the trick.

American consumers have been living beyond their means for a long time. Look no further than families who grabbed subprime loans and bought homes way beyond their budgets. This is what started the trickle of defaults that first eluded bank notice but then cascaded to bring down the financial system.

Finger-pointers tell everyone that the “creative” packaging of these dubious mortgages into securities and the lax regulation of the process caused today’s problems. But it takes two to tango, and all those dumb loans were taken out by consenting adults who have to take responsibility for their assumption of debt.

A mortgage broker or banker can flatter you by assuring that you can afford the mini-mansion about which you have always dreamed — not the modest fixer-upper you know in your heart is within your means. But it’s the banker’s or broker’s job to peddle mortgages, not to make sure you do what’s prudent.

After all, if you always eat junk food and never touch a vegetable, that’s your own fault.

It’s human nature to want a big home, a fancy sports car, an expensive vacation or your own idea of luxury. At the same time, it’s the responsibility of the individual to live within his or her means and purchase what he or she can afford.

In general, American consumers have been guilty of overspending and overborrowing for too many years, and that is a driving force behind the financial mess in which this country finds itself today.

Now is a great opportunity for people to rethink how to live within their means and to understand how to properly handle their money.

As we start the painful rebuilding of our financial lives, we should embrace the process as a chance to do better. The current crisis is actually forcing people to find ways to invest prudently for their future.

With cheap credit gone, it’s time to look carefully at sound, long-haul investment ideas that provide realistic returns, and not fodder for pie-in-the-sky dreams.

Jim Pavia is the editor of InvestmentNews.