The Economic Light of Day
Posted: Tuesday, October 14, 2008
by Missing Link
"We can easily forgive a child who is afraid of the dark; the real tragedy of life is when men are afraid of the light." Plato
It seems to me that the economic light is clear. The greed of our nation has been fully illuminated, completely exposed to the light of day. It is scaring the men of this country. We've lived a long night of partying, spending, nightlife, and excess, but now the sun is up and the house is a mess.
Our American Dream was never a television in every room or a Wii for every kid. It was never two cars and a four thousand square foot McMansion that we don't have time to clean ourselves. Our American Dream was not a country so driven by greed to acquire that we would endanger the future of our nation, the quality of life of our children.
And yet we have and we did and we are all paying a price but nobody is willing to tell us what the actual price is. This economic crisis is a little like buying a car. We know it costs a lot but nobody is willing to tell us the exact amount. It's like a restaurant where people are so rich that there aren't any prices on the menu, the problem is that we aren't rich and it does matter what it all costs.
The light is shining on our system and the paint is peeling and the lawns are dead and there are bank repo signs in the front yard. The politicians are working their hardest to make us all believe that it isn't really happening. They are trying their best to place blame anywhere but where it belongs, on our doorsteps.
It may be that the light is shining on the unraveling materialistic fabric of our society. It could be that we are all going to have to live with less, desire less, covet less, eat less, drive less, travel less, spend less. It may be that the light of day hasn't risen far enough yet to show where the bottom of the market really is, perhaps, and perhaps not. But the light is shining brightly enough to show that there are no more shopping sprees on Visa, no more Hawaii vacation on American Express, no more Harleys on MasterCard.
And the Sacramento Bee headlines last week read, "The Nation is Gripped by Fear". Perhaps the lie of greed is the light that shines, perhaps the exposure of greed's false promises are driving the fear. For what is everyone afraid of after all I wonder. Nobody is starving, most people are working, all we're facing so far is a dismal Christmas by modern standards. And yet, this Christmas could be the best ever.
If Americans are truly afraid of the light shining on their greed and avarice then shame on us all. Shame if we are not mature enough adults to learn the lesson of this economic breakdown and to acknowledge that it wasn't simply large banks and wealthy people who created this mess although they hold a key element in it. It was each of us. It was every person who defaulted on a loan or credit card, everyone who bought something they could not afford and failed to make the payments, everyone who bought a big house on a fantasy mortgage, everyone who bought, sold and flipped houses fueling the market frenzy. We all contributed in some way and we're all going to pay. I think we're tough enough to look at our financial behavior in the light of day and not be afraid but rather to hitch up our pants and trudge onward from here - wiser and unafraid - together.
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Top-level comments on this article: (3 total)The current economic crisis is a direct result of the democrats forcing a policy of banks lending to those who cannot afford to pay for their houses. It is a simple case of social engineering by liberal democrats in congress. Those very same liberal democrats are blaming everything on capitalism, saying we need more regulation of the private sector. That is a blatant lie. We need to let capitalism work without government interference. This crisis would not be happening at all if government knew how to stay out of the way of capitalism. Government does not seem to know how to say: If you cannot afford to buy a house, you cannot own one.So let's talk. Without the banal finger pointing of one party at another, where does the government's role come into play? I think you are totally off base in saying that blatant greed led us into this mess. I know someone who took a job in the mortgage business and he told me that they were filling our loan apps with fraudulent income levels in order to quyalify people who then sign those docs and submitted them as fact. That was the loan companies like Countrywide and Ameriquest doing that, it was not the government. That's not Republican and it isn't Democrat, it's not government, it's GREED. Do you get it? Greed caused this, unregulated greed on the part of companies that pushed their employees to do things like fraud and greed that caused home buyers to lie their way into a house that was too expensive. It is greed that causes people to run up their credit cards and buy too-expensive cars and to default on the loans. It's greed Anon, greed! Don't dodge - or allow others to dodge - responsibility or you are no better than the liberals you want so much to slam, you want someone (maybe not government) to run your life? Capitalism is not some ghost that runs itself, the market economy is run by people who run large companies, and I for one do not see much good in allowing the rich capitalists to look out for my middle class best interests. It that was such a good idea, we wouldn't be here now would we?Well I meant that "anything but" blatant greed led us into this crisis.
Excellent article, Mr. Link. For all the talk we've been hearing about what could happen after this election, it sure doesn't seem like we've heard enough talk about the greed and corruption which has gotten us into this mess in the first place. And that is what scares me.
ML - No dodge here. Listen up. Franklin Raines ran the GSE's. His base salary was 1 million a year. The GSE's were designed to insure loans made to the poor. Raines discovered that his bonus was a percentage of the dollar amount of mortgages the GSE's insured. He wanted to increase that dollar amount exponentially, so his bonus would go up. He increased the GSE's expose to risk, by insuring very risky loans. The GSE's had cash on hand to pay for 1% of the amount they insured. When people could not pay back their loans, the GSE's had to pay out. Where did the money for the remaining 99% come from? Your 1040. Raines made 84 million dollars in bonuses alone in 6 years. He was then forced out. Barney Frank is a senator, democrat from Mass., who allowed him to do this, then blamed the corrupt wall street - without a mention of his own hand in the process. Yes, that is greed - government greed.Let's get really basic here. Capitalism. It is an economic system that allows private ownership of assets, with government taxing and regulating to a degree. If I want to make money by loaning money, then I am going to make sure the person I lend to is able to pay it back with interest. Why would I lend to someone who may not be able to pay it back? I wouldn't, unless a government policy stepped in and forced me to, under the threat of taking away my license to do business. Thank you Fannie Mae and Freddie Mac.True capitalism would let me loan to whoever I wanted to based on borrowers ability to pay it back with interest. This entire mess would not be happening if banks were not forced to lend money to those who cannot afford it, under the name of helping the public.That is democrat - whether you like it that way or not. Bush tried to stop the GSE's abuse. Did you know that? Greed? Yes. Government greed.About lying on the mortgage application - a borrower cannot get away with it if he is thoroughly checked out. If the bank has to lend otherwise lose it's lending license - that is not capitalism. That is socialism. Capitalism works just fine.No one causes someone to lie, ML. People who lie do it because they choose to.Hey Anon,Thanks for the great conversation. I am surprised to hear you knocking Raines for being a good capitalist. It is the norm of capitalism to award high performance so his bonuses were refelctive of his achievement of earnings goals for his organization. Excessive, but negotiated by his bosses.I think you're going to have a heck of a hard time convincing me or anyone else that George W had an original thought on this or any other issue; much less, the leadership skills to do anything about it.Now you make a good argument for capitalism, however, your argument is based on people making a career out of being a capitalist and in an atmosphere that promotes honest trade. The problem Anon is that we have seen our capitalist system taken over by rich private interests that set up large loaning organizations that did anything necessary including fraud to make loans. They weren't making these loans to put poor people into houses, they were making these loans to make money, fees and interest. They abused your view of capitalism because they were in it for the quick - and very large - buck. They made their money and sold off the paper and got out before the roof fell in.
These companies set up whole organizations that fostered an out of control capitalism. They created a housing bubble that initiated a frenzy of buying and buying up. People were given easy access to loans for sure. But many of them flat out lied to get them or they signed on irresponsibly taking on higher debt than they knew they could afford thinking they would flip the house and make a quick buck.Ordinary people and wealthy people used a lack of adequte government regulation to abuse our capitalistic system. They lied and committed fraud and they screwed us all. Now you want to hammer on the Democrats - fine - I don't care, as far as I am concerned each and every elected official of all parties ought to be tarred and feathered and run out on a rail. They didn't do their jobs.I - without a Harvard Education like Raines has - could see this train wreck coming five or six years ago. I remember having discussions at back yard BBQ's about it and everyone agreed that it was a house of cards and it was going to fall. It was obvious and I do not believe that any of those jackasses in Washington didn't see it coming too.Capitalism works, but relies on honest, credible, honorable business practices or we all get taken for a ride. And aren't we on a ride now!Thanks again for the conversation,ML
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