Today’s rant – spurred on by a friend’s insightful rant on an email list I maintain. Jack made some very poignant comments about the economic state we are in and I wrote the following response – edited for clarity in this forum.
I listened to Obama last night – missed the first 15 minutes but I assume that was pretty much all about creating a frenzie of cheer and support for what he was about to say. We know you inherited all of this, I’m tired of hearing that – can we please move on… okay - he did eventually.
I don’t think the problems we have today are all about mortgages and greed. The money on Wall Street was greed driven, and we all know now that they think, "Greed is Good." While I do believe it started with the Clinton administration pushing home ownership (much like Obama is pushing college) for everyone – even those who shouldn’t in the state they are in. It didn’t end there – in fact it could have ended sooner – in 2001. As for homeownership – that’s not bad but most of these people should have considered something less then the homes they had – like maybe some people should consider Technology schools, not college)… but I digress I cannot, however, agree with many of my liberal friend’s panic in saying "I’m willing to let Obama do whatever he thinks is right, including takeover of the banks if need be." That’s as irrational as Bush letting Cheney wipe his ass.
Regarding Clinton starting this vs. Bush causing it… In the dot.com "Boom" Greenspan warned of "irrational exuberance" and we had a bubble burst – Yes, I think Clinton started it – to feed the mass of Baby Boomers who got him elected, but Bush restarted the engine in 2001 to bring us out of the "mental" depression that we were all in after those jealous fuckers bombed us. They are all politicians who live to be elected and these days – live for the 4-8 years they are in office. Clinton had the 60’s generation to support him, Bush had us, who wanted what our parents had – so he tried to give it to us. He just picked really bad people to help him do it – people that were politicians that use other people to get what they want – power and enough money to say fuck you to the rest of the world. I was fooled by them too because I believe in a Republican government….
CMOs (Collateralized Mortgage Obligations), the Gaussian copula function, etc. – Yes – I agree – that’s the Wall Street problem. There is an interesting cover story on Wired magazine this month and much easier to read then the Fortune article a few weeks ago. My feeling is that this is what took down our investments. But it’s not the only thing sick in the economy. I think that it’s the GREED – but not all that people are discussing is Greed driven.
Regarding capital gains cuts on home sales, stock sales, and dividends. I’m sorry for but not willing to support people flipping houses, getting caught in the housing boom. Builders developing against the demand is human nature – people want to better themselves and I don’t think greed drove most of us, it was more like PANIC that we wouldn’t have what generations before us had. That we missed the boat, and this might be our last chance to have that home, build wealth, etc. The people who sold the ARM’s and all-interest mortgages were greedy, feeding on this panic and desire. And the people who were flipping houses also got greedy – some weren’t smart enough to keep money in the bank when doing it. Like sales people – we know there will be lean years with no commission – that’s why we keep cash in the bank. But the people taking the chance to buy a home were just being human. They just forgot that its buyer beware in this country. (and honestly, I know this – I put a little too much of my "cash backup" in the market so I’m pretty much working till I die).
Or is it buyer beware in this century? – The fact is: our government did fall down on the job. While I don’t believe in heavy government "control" I do believe in "oversight" and we got lazy there – the Bush administration pulled too far back. I don’t want the government to run things or own things but I do expect to get my money’s worth on regulators. They let all kinds of devious shit get through from billion dollar ponzi schemes to ass holes like Stan O’Neil of Merrill making really short-sighted and bad decisions. I didn’t like Obama’s tone that all of wall street and banking is corrupt – you can’t lump them all into a bucket of rot – but there are some really bad apples in there and we need to catch them before they infest the rest.
Investment in infrastructure and the military always works. Bush chose to blow up another country to get rid of our old stuff to buy new stuff. A good arms race gave us the 50’s – not a bad time to be alive
– and this along with NASA lead to really cool technology. I’m a little worried that Obama may not buy new stuff (then we will get blown up and it doesn’t matter does it). If he spends money on bridges and power plants that is okay too. The one thing I like about France is their embracing nuclear power (well two things – I dig their women too, maybe three – their love of art.. but that’s it). We should do that. But we don’t need to prop up old industries that nobody wants to work at for the wages they pay. We don’t have a billion Chinese that are willing to work for peanuts to pay for our car companies (its complex – another rant). Further, I don’t think healthcare reform or investing in education will pump up the economy – that’s all feel good politics. Don’t mix the two
We can’t force innovation just like we couldn’t force a revolution in Iraq – it has to come from the people. What can we think of to replace the auto industry?
We should "fix" healthcare and education things not "nationalize" them. Again, better regulation not controls. Better ideas not more money after bad ones. What can we do differently then Canada, Europe and China to help people but not create mediocrity and compliance?
