Friday, October 10, 2008

One More Columnist Takes on the Financial Mess

(News-Herald, October 9) Like most other average Americans, I’m not sure what the heck is going on with the much-ballyhooed economic crisis. I’ve read about it -- I don’t think television is capable of doing any useful coverage of a mess this complicated. But it would be nice to know whom, exactly, I should be mad at.

I’m not too mad at all the people who acquired mortgages they couldn’t afford. I’m more angry at the shysters who pushed those mortgages. I know the buyer is responsible for his own choices, but in situations like this I think of my Grandmother Binmore, who would have fallen for this kind of thing. She would have been easy pickings, not because she was dumb, but because her generation grew up believing that official people from official organizations didn’t encourage customers to do something stupid. If a banker or a government official said it was a good idea, you could trust them. I’m much more angry with people who prey on that sort of trust than with those who exercise it.

But the bad mortgages wouldn’t have trashed an economy. The estimate I’ve seen is that 94-96% of all mortgages are still being paid on time. That’s not a collapse of the housing market.

No, I save my real ire for the financial bigwigs who invented a new kind of side bets on mortgages, and then sold side bets on the side bets.

In other words, one set of shysters sold Uncle Wally a three-legged race horse. Then another set of shysters placed bets on the three-legged horse with everyone else’s retirement money. And back in DC, the shysters who were supposed to make sure the horse race wasn’t fixed decided to let the other shysters run free to exercise whatever stupid thought entered their heads.

So we end up poised between a rock and hard place, the devil and the deep blue sea, paper and plastic. We could either watch the nation’s economy crumble, or watch the federal government wrack up unimaginable debt while gobbling up another chunk of the formerly-private sector (and we may yet get to see both).

Congress, given the chance to stand up for the nation’s best interests and use patriotism as its guide in difficult times—well, Congress blew it completely again. Instead of being a monument to extraordinary vision and leadership, the bailout bill is a bloated monument to self-serving pork. Under the pretense of guiding the firemen to the burning building, Congress started looting the place.

I don’t know if the bailout bill is a good thing. One commentator said that it was a horrible thing, the worst thing ever—except for doing nothing. That may be true. Maybe when so much of the public trust is threatened, Uncle Sugar must act.

The desire to federalize chunks of the private sector shows many things, not the least of which may be that Americans have simply become too soft and wimpy to tolerate the ups and downs of free market capitalism. But I think it also shows an understanding that the private sector holds a lot of public trusts.

Someone who owns a restaurant or a movie theater or a widget factory controls resources that are a public trust. Everyone who eats out has an interest in a good restaurant; everyone who works at a factory or depends on the taxes paid by workers—all of those people have an interest in that widget factory.

Private actions have public implications. The private individuals who continue using lawsuits to harass both the ORA and persons attached to it aren’t simply exercising their own personal right to hire lawyers and be a pain in the keister. If they win these lawsuits, they will spread the word that Venango County is not just reluctant about economic development, but is openly hostile to it. And that will be bad news for all of us.

When we see private individuals in any sector making choices that threaten the public interest, the urge is to protect that interest. But if we put every public interest under the protective hand of Uncle Sugar, we will ultimately hand over control of everything to the feds. And that is truly awful news for everyone.

So maybe the cause of this mess is a perfect storm, a long line of people acting as if they had nothing and no one to worry about but themselves. It’s useful to remember that, as citizens, we all carry a piece of public trust with us.

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