Posted on 10/03/2008 4:03:36 PM PDT by Rummyfan
What if the current Mortgage/Credit Crunch is not just an isolated financial crisis, but in fact the signal for the death of one era, and the (painful) birth of another?
If that is the case, it goes a long ways towards explaining the bizarre nature of what we’re seeing going on in Washington and on Wall Street… and suggests that we need a whole different set of solutions.
Living out here in Silicon Valley, the heartland of American innovation, it’s hard not to be appalled by the events taking place 3,000 miles away in the seats of American finance and government - and hard not to fall back on the ‘pox on both their houses’ attitude that polls say is increasingly common among American voters.
From where I sit, the United States government has embarked on two pieces of social engineering in the last few years. One was to make oil expensive as expensive as possible to drive people to greater use of alternative energy sources - because anything less would be irresponsible and destructive to the environment. The other was to enshrine home ownership (i.e., easy-to-obtain mortgages) as a new American right - because anything less would be unequal and racist.
None of us voted on these decisions - indeed, neither was even spoken about directly, much less debated. But nevertheless, both became national policy… and both have sparked national, now international, crises. Then, once they became crises, both were blamed on ‘greedy capitalism’, instead of what they really were: legislative interference into market forces.
Fine. We’ve been through this before, and no doubt we will see similar, government-induced crises again - inevitably accompanied by Administration officials and our elected representatives pointing at everyone but themselves.
But what makes this particular economic crisis so appalling, at least from this vantage point, is the sheer scumminess, corruption, short-sightedness and general incompetence of everyone involved. At least in the business world, especially in the take-no-prisoners world of high-tech that kind of venality and ineptitude either gets you fired or kills the company; by comparison, in Washington, it puts you in charge of the recovery effort.
Nobody in this mess has covered himself or herself in glory. President Bush seems to have had the right instincts on this, but as a lame duck who long-ago burned up all of his public support, he mostly seems dithering and toothless. The Democrats declare that the nation is at risk… then go about as usual turning the bailout bill into another yet another partisan pay-off scheme to fund the next round of crisis-creating social engineering. It is a measure of just how corrupt the Dems have become that Senators Dodd and Frank, who perhaps more than anyone in Washington are responsible for this crisis, not only are allowed to keep their committee seats, but run the press conference on the bail-out. Quis custodiet ipsos custodes?
The crowning moment of course comes just before the vote on the bail-out package when Speaker Pelosi decided, putting the needs of her country first, to use the podium to attack the Administration and the GOP.
The Republicans, as we all heard, maturely responded to Pelosi by banging their little fists on the floor and refusing to play any more. Wah-wah-wah. Remember when Republicans were the outsiders in D.C.? Now they are such corrupt Washington insiders that, like a group of palace courtiers, they are willing to put the entire U.S. economy at risk over protocol and etiquette.
As for the two Presidential candidates, the less said the better. Senator McCain, sensing a great PR opportunity to show that he is both a leader and a Beltway Pharisee, blasted into Washington, made a lot of noise, accomplished little, and was all-but run back out of town. Senator Obama, who appears to be up to his neck in Fannie Mae ‘contributions’, did as he always does: said a few platitudes, (metaphorically) voted “Present” and took off as quickly as he could.
Meanwhile, while this absurdity is going on, the stock market tanks, and the U.S. economy loses $1 trillion.
It is impossible not to look upon all of this as a kind of a vast, predictable pantomime. The same people who created the mess are honored for (sorta) getting us out of it, a few scapegoats go to jail, the real perpetrators not only escape punishment but are often rewarded, a bunch of regular people get screwed (lose their jobs, go bankrupt) and a whole lot more end up paying the bill for two million failed mortgages that never should have been granted in the first place.
The American people know this, which is why:
1) They aren’t taking this current crisis as seriously as pundits say they should - after all, if our elected officials can play politics against their enemies, and take the time to lard the bailout bill with pork, why should they? And,
2) They have nominated for President two candidates who - ostensibly — represent ‘Maverick’ attitudes and ‘Change’.
To my mind, what makes this economic crisis different from ones in even the recent past is that it has exposed the fact that there are, apparently, no real leaders left in Washington - that the intellectual capital in the National Capitol has fallen to a new low - if that’s possible. Most of all, it shows that we can no longer look to D.C. for leadership into the rest of the 21st century.
Marxists and statists of all stripes are, as one might expect, rubbing their hands in glee and declaring this the final death crisis of Capitalism. But I think just the opposite is occurring. What we are in fact seeing are the final death throes of governmental social engineering. As I noted two weeks ago, we are in a kind of Mentos-in-coke world right now - where, thanks to tech, the sheer speed of transactions and the enormous breadth of response, almost any outside influence can quickly turn the whole economy (or culture) into an explosive brew.
As it happens, out here in Silicon Valley, we have been conducting our own social engineering experiments. Three, in fact, have been at least as sweeping as Freddie Mac’s changing of mortgage eligibility rules. One of them has been to wire the entire world in a huge, high-speed global information grid (the Internet). Another has been to restructure the entire entertainment industry and its pricing model (the iPod). And the third has been to empower the citizenry to form groups based upon common interests rather than the limitations of physical proximity (Web 2.0 - social networks).
Here’s the thing. All three of these multi-billion dollar projects have been pay-as-you-go, driven largely by individuals and companies that assume their own risk, they have instantly rewarded smart decisions and punished bad ones, they are tested every millisecond against human nature (i.e., the marketplace), they are biased towards efficiency over seniority, and most of all, they are voluntary.
And they are all succeeding.
We will get out this current financial mess - not by government fiat, but because entrepreneurs and smart corporate executives and hard-working everyday people will innovate us out of it. They will come up with the new financial instruments that restructure this debt, the new technologies that will generate the wealth to make up for this loss (as they did after 9/11) and ultimately create more jobs than are right now being lost.
And if Washington really wanted to help Americans (and there is no indication right now that it does) it would, the instant it passes the bail-out bill, get to work not adding more regulations in response to this crisis, but stripping away the destructive ones we created after the last big one. And a good place to start would be Sarbanes-Oxley, which brilliantly keeps wealth out of the hands of regular workers (by keeping start-up companies from going public), all while costing, by my reckoning, $200 billion over the last six years.
If the last two weeks have taught us anything, it is that Washington is not going to get fixed, no matter who is elected. The world is moving on. Seven hundred thousand people are joining, via the Web, the Global Economy each day. If the prognosticators are right, we are now only 1000 days or so from crucial turning points in the world economy (the next billion consumers, universal wireless broadband, nanotech, thinking machines, etc.)
A new era - with new rules, new winners and new losers — is coming up on us fast, and we need to get ready for it right now. Our national leaders just had their chance to prove they were prepared for this new era - and they have failed miserably. We now have to look elsewhere for leadership… and quickly.
All that information, crap to listen to and people to talk to and still the author has no clue.
Look pal I ain’t no laboratory rat for liberal experiments. Y’all might not want to come around here spouting that PC BS.
Has this person looked at his own back yard? Silly Valley is the epicenter of overpriced and falsely valued real estate. Home equity loans off of SF Bay area homes drove a large part of the Central California real estate bubble.
Frankly, I'm getting along fine without an iPod.
So am I.
Of course, my Blackberry has a 4gig chip loaded with all my tunes, and coupled with my stereo bluetooth headphones, who needs an iPod?
they also need to restor the risk that collateral will go DOWN in value with regards to bankruptcy.
If a lender INFLATES the value of property to conceal a 100% mortgage then they should pay a price if it all falls appart.
Oh how I wish it were so, but after witnessing the biggest scam in my lifetime done unto us, We, the People, I think the opposite is true for now. What a sh!tty week in American politics in the Obamanation.
Washington has pulled back the curtain on their view of the rest of the country. They think we are sheep to be sheared, anytime they get in the mood.
The people getting stuck with this bill from the Wall Street geniuses, hedge fund managers, CDO derivatives, bailing out the AIG's of the world, and all with a big dose of toxic laws and regulations from their enablers in Washington - US - were sitting ducks. We howled at the moon for a week, brought the capitol switchboard to it's knees, flooded email accounts until their computers locked up. And it got us NOTHING.
My money is leaving the country, at least my investments. I just automatically assume that Washington is out to get me now. They have spent a week making that CRYSTAL clear. They have no qualms about coming back for $700 billion time and time again, either. Who can doubt that?
To what safe haven?
There won't be a safe place in the world in a complete worldwide financial catastrophe.
Now, that's funny.
Color me dubious. Sounds a little bit like the “engineers could run the country better” stuff I heard in the early 70s. Then we got Jimmah...
You may be right. So be it. I don’t have the ability to remake the world as I’d like it.
But know this: These guys in Washington - in both parties - are going to have to go on a world-wide scavenger hunt if they want to fleece me for a SECOND time. I’m going to at least make them earn it, this time.
“Home equity loans off of SF Bay area homes drove a large part of the Central California real estate bubble........”
Amen.
What has gone unremarked, for the most part, in the hand wringing in this crisis is the willing participation of Main Street along with Wall Street and Washington in creating this mess.
It is hypocritical for Main Street to get a free pass in this crisis and only blame the “greedy bankers” and the “dumb politicians”.
Studies have shown that fraud and misrepresentation were present in about 70% of the sub prime loans that went south. The reality of the situation is that many Americans were all to willing to pursue reckless financial strategies as long as their home equity would continue to bail them out.
Politicians can only pander to constituents who are willing to be lied to. There are too many Americans with an entitlement mentality who are willing to accept “free” gifts from the Government.
The Feds response to this crisis has been clumsy but we never would have gotten to this point if there were not many citizens demanding ever and ever higher government benefits, feel-good environmental tokenism AND lower taxes and gas prices.
Phil Graham called many Americans a bunch of “whiners”; reluctantly I have to agree with him.
Keep that in mind.
Doin' fine, feelin' fine! I hope things are very good for you.... I remember you told me about some challenges a while back....
Meanwhile, while this absurdity is going on, the stock market tanks, and the U.S. economy loses $1 trillion.A free market bowel movement to excrete the whole Freddie/Fannie enchilada, IMHO.
Yeah, man. It is what it is and it was what it was.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.