There are two factors, out of many, that have put Americans where they are today:
1. It’s part of the American Dream to think someday, even if you’re working on an assembly line, you could be the C.E.O of the company.
2. Americans believed there was twice as much money in circulation than there really was, because some banks loaned money with a 35 to 1 ratio of retained cash to loans. (This may be easier to understand if you think of people going to Vegas with $1 dollar and yet betting $35 dollars at the tables. (We, of course, can’t do that, but banks could.) By making these loans, even if people or companies couldn't pay them back, we got faked out on how much houses and companies were worth. We didn’t know that a lot of this money was going from a poorly run bank to people or entities that spent the money on things which were really worth half of what they were selling for. Americans have always believed that beans can grow to the sky.
So now, we’re paying for it. Obama worked hard to produce a finance bill to change this behavior, but he can’t erase the past. He can’t change that people in Compton and Brentwood paid double what the houses were really worth. The bankers are well off, but the people who borrowed the money are in big trouble. This can be laid at the door of Bush and Clinton and (of course) Greenspan, who read Ayn Rand novels for economic guidance, He didn’t think anything should be regulated, because the market was rational and he didn’t believe any company would do things that weren’t good for the stockholders.
But we’re paying for it, and we must accept some of the responsibility. People who voted for Bush, who was letting all this dysfunctional behavior go on, are responsible. The democrats are responsible for the fact fannie and freddie had to be nationalized. When we took out a liars loan which didn’t make us prove we made $200,000 a year we were responsible. We all figured prices of homes would keep going up,
Deep down, didn’t any of us question why there was all this money around? We sold our Brentwood condo in 2005 because things didn’t seem quite right. We’ve been renting ever since. My dry cleaner laughed at me for selling the condo. “Didn’t you know you are never going to get back into this market?” A lot of other people couldn’t understand why we were so brainless.
It’s wonderful that Americans are a hopeful people. Well educated people thought they were immune from forces like a financial tsunami. But we really weren’t that safe in our jobs.
So do we blame the bankers and politicians for everything? Didn’t we have a responsibility to be rational? I remember a student of mine who wanted me to give him the money for half the house he bought and he assured me we’d both get rich. Since he never came to class and got really bad grades, it would have been the most foolish thing I could ever do.
But I believe that the people running the banks, or the regulators who were supposed to keep horrible things from happening probably weren’t that much smarter than my student. They both believed in things that weren’t true. We believed there were master spies at the CIA, until we found out about Howard Hunt.
Since Bush got elected twice, Alan Greenspan was proclaimed a genius, and Christopher Cox (the head of the SEC) proved that even someone with an IQ of 80 could graduate from an Ivy League Law School, all of this was allowed to happen. Because we didn’t want men kissing men, we voted Republican. When many demanded that freddie and fannie should be fixed, Democratic rep. Barney Frank made sure it didn’t happen.
I love America and I believe we have to take responsibility for part of this. Sometimes Americans, like most other people in the world, believe that things can only go up. But when they fail, we say it’s always everybody else’s fault. Now we think that Obama should have already fixed what the bankers and politicians took 15 years to destroy. They forget that when things are bought for twice what they’re worth, someday they’ll have to pay. (I’m not talking about the people who got a loan from Countrywide and the other Orange County fly by night operations. They were lied to and didn’t think friendly people like these guys could ruin their lives.)
We have to take some responsibility for this, and, unfortunately, live through the pain of deleveraging. A lot of crooks got away with a lot, but we voted for the people who could have stopped it. We can’t blame Obama for not fixing it in two minutes. I personally think the thing that protects me the most was that my father died when I was seven. Thereafter we lived from one social security check to the next, wondering if they would stretch to the end of the month so we could eat. I know that everything doesn’t always turn out all right, and that whatever happened to me after that was my responsibility.
I grieve for the people who can’t find work, especially the long term unemployed. And I also wonder why we let these pseudo-American CEOs send all our jobs overseas, without our politicians raising a fuss.
Doesn’t responsibility s—t?