Contrary to what John McCain suggested at the beginning of this crisis, the fundamentals of the economy are not strong, and some of the root causes of this crisis had to do with the day-to-day struggles that ordinary people are going through with flat wages and incomes but constantly increasing costs. That puts pressure on them to take out more debt, to use home equity loans, to try to refinance. It created an environment in which this kind of crisis potentially could occur. -Obama on Face the Nation on Sept 28, 2008This means that, according to Obama, anyone who experiences a decrease in real income is under pressure to go into debt. People living within their means just isn't an option.
The proposed solution is a debt-financed bailout of companies and people who took on too much debt. This actually makes sense if we admit that a highly leveraged economy doesn't work. We're still arguing, though, that a good banking system involves a lot of debt and any time real wages fall it's natural to borrow to maintain consumption levels constant. We're still justifying our addiction. No program to wean us off will work until we admit we have a problem.
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