If you want to know what people think, just ask. When I asked for views on the current economic and political situation through a recent online poll, more than 100 readers responded. One percent are elated, 12% are optimistic, 34% are concerned, and 53% are irate.
Investment losses aren’t the biggest worry. Not many respondents have panicked, sold investments, and moved to cash. What really has them worried is the unprecedented increase in our national debt to bail out failing companies and stimulate the economy. A second fear is the possibility of higher inflation.
Only 34% of the survey respondents were “extremely concerned” about losses in their investment portfolios. However, 77% were worried about the record deficit spending, bailouts, and stimulus bills. Many (62% were extremely concerned) fear that the record peacetime government spending will lead to increased or hyper inflation.
The expansion of government control or the prospect of government ownership of private companies was an extreme concern to 68% of those who answered the survey. And 63% were also extremely concerned about the expansion of government programs like health care, education, and more regulations on businesses. Only 29% were extremely concerned about the possibility of prolonged deflation.
When asked what they believed to be the major causes of our current economic crisis, those surveyed chose these from the available options:
• Poor lending decisions made by bankers (91%)
• Poor borrowing decisions made by consumers (90%)
• Government policy (86%)
• Unethical lenders (86%)
• Rampant corporate greed (72%)
• 1999 legislation that opened up competition among banks, securities companies and insurance companies (59%)
• The economic and domestic policies of the Bush administration (53%)
• Inherent weaknesses in capitalism (29%)
I was especially interested in the suggestions respondents had to resolve this crisis and keep it from happening again. An overwhelming 92% said we need a new emphasis on financial literacy courses taught in our schools. I hope both educators and parents take note.
Even though rampant corporate greed was listed fourth among the causes, 72% of those taking the poll felt those on Wall Street responsible for this crisis should have criminal charges brought against them and be incarcerated. Next in the list of fixes were: a significant reduction in government spending (74%), more regulation of the mortgage lending process (72%), and new tax cuts or an extension of the Bush tax cuts (64%).
Our respondents don’t think much of the idea of increasing government control of industries like banks, insurance companies, or auto makers. A whopping 82% disagreed that the answer to our economic woes is the nationalization of key industries.
Over 86% of those taking our poll were middle class, defined by President Obama as people making less than $250,000 a year. Yet 76% of the respondents did not favor higher taxes on the wealthiest Americans. Another round of bailouts isn’t going to gain much public support, with over 66% opposing any more government spending on stimulus, bailouts, and shoring up the banking system.
Finally, we asked what our respondents are doing as a result of the crisis. It was no surprise that 89% said they have cut personal spending, 87% have increased saving, 83% have decreased debt, and 78% have increased what they are putting into investment accounts. Despite the avalanche of bad financial news in the media, only 15% reported selling their investments and going to cash.
The good news, to me, was that those who took the survey were not giving in to short-term panic. Instead, their biggest concerns were whether short-term attempts to solve the financial crisis would harm their children’s financial future.