Four years ago I was so outraged by the way the state legislature in Albany was selling out our collective future, to hand out money to privileged interests today, that I ran against them as a minor party candidate. Had I known what was going on in business, and in many people’s own lives, I wouldn’t have bothered, because what has been going on in Albany is what has been going on in our culture. We have had a long national orgy, a white collar riot, and the participans are going to make the non-participants and their children pay for the fallout.
The “democratization of credit,” as Alan Greenspan called it thinking it was a good thing, spawned a democratization of white collar crime. Everyone took part.
From the Wall Streeters trading derivatives with no objective value, and paying themselves like emporers based on made up values.
To home-debtors “liberating” the equity from their bubble inflated homes in a series of additional mortgages, lying about their income to qualify, and blowing the proceeds on various and sundry bling.
To all the middle men and women who got a cut, including appraisers who lied about values, mortgage brokers who lied about terms, and realtors who claimed housing values always went up.
To the the “investors” who bought multiple housing units with nothing down, claiming each as their primary residence on their mortgage application.
To everyone who profited from sending out the dozens of credit card applications per week everyone received at the peak, and the checks that people were sent to cash getting an additional mortgage in the process, and those who took the bait.
To the politicians who were on the payroll of all and sundry.
McCain and Obama may be willing to blame Wall Street an Washington, but the truth is worse, and only Mayor Bloomberg seems willing to refer to it. The number of people taking part in the national white collar riot may be as much as 50 million of the 300 million Americans, the fallout may be as much as $2 trillion, and Americans will be permanently poorer as a result.
The $2 trillion is the back-of-the-envelope calculation based on the $5 trillion housing values will have to fall to get back to normal, minus the homes owned by folks like myself who didn’t run up the credit cards or mortgage balances based on how much their house was “worth,” and those homeowners who will suck it up and pay off their mortgage while in house-poverty. All while paying higher taxes in the face of rising inflation to offset those who cashed out and spent.
As in a street riot, with so many people doing the wrong thing, it is impossible to punish them all. Virtually no one, for example, is being punished for mortgage fraud, even though it had been ubiquitous, with both the borrowers and lenders complicit. Indeed, both parties look at the perpetrators as a voting block. Someone told my our Senior Senator wants to pay off everyone’s credit cards too. And although I have heard Barney Frank says he wants limitations on what Wall Streeters can earn, I haven’t heard about any limitations on what those getting bailouts can re-borrow.
While the state legislature was destroying the future of public services and benefits by bankrupting the state, tens of thousands of executives were enriching themselves by bankrupting their firms, and millions of Americans were living the high life by bankrupting themselves.
I’ve told someone involved in responding to the disaster that I want an internet database of everyone who busted on their mortgage and gets relief, how much they borrowed in how many increments, whether they lied about their income. Those who saved a downpayment, bought at the peak because they didn’t know any better, with an exploding mortgage they didn’t understand? You have my sympathies. The rest? Let the neighbors know where that Lexus, boat and plasma screen came from.
Same thing with everybody who make big bucks on Wall Street, or made more bucks than they should have in those cheesy mortgage brokerage firms that tanked a year or two ago, based on profits that in reality did not exist and mortgages that went bad. I want their name and how much of the $2 trillion they are responsible for.
If we can’t jail them all, we can at least embarass them and make them slink around the country for the rest of their lives rather than strut around with their ill gotten gains feeling like the winners. What message has this whole era given to younger people about who are the losers?
Let me repeat what I’ve said over and over again — the current financial disaster is merely a symptom, and it’s a crisis happening all at once because the market looks ahead and sees what is coming. The problem is our entire culture. But now it is a symptom that may cause an even worse disease. I had no idea the collapse of our debt-driven excess would bring down the entire financial system and bankrupt the federal government. I had no ideal millions of people were living, and many of our businesses were being managed, so irresponsibly. Now that I know what went on, however, it is all inevitable. What is shocking and depressing is not what is happening, and going to happen, but what led up to it.