Useless fingerpointing

February 3, 2009

Unrest is kicking in already, and it’s going to get much worse.

Thing is, it’s easy to blame the Masters of the Universe.  It’s easy for Chinese, Russian and French crowds to blame America.

But let’s not bring that guillotine back just yet.  The quicker we all take responsibility the quicker we’ll get through it.  Let’s keep in mind that …

…we are all guilty:

  • My friend who flipped 3 houses in 4 years, installing tile and wood with her bare hands, literally building her nest-egg.
  • The guy who bought a condo in Las Vegas or Miami instead of playing the stock market (and how is the stock market not speculation also?).
  • My other friend who took out a home equity loan to start a business.
  • All those who used a HELOC for a new car, a Mexico trip, daughter’s wedding and a 50″ LCD TV.
  • The low-income family that used an option-ARM to grab a piece of the American dream.
  • The brokers and agents that made an easy buck.
  • The mortgage bankers who thought they had created legitimate groundbreaking financial innovations.
  • The Wall Street bankers who securitized the loans.
  • The European bankers who couldn’t get enough MBSs and lobbied our government hard so they could get more.
  • The Chinese, Japanese and Russians whose governments invested almost 1 trillion in Freddy and Fannie bonds for a delicious return.

…we all benefited:

  • The consumers worldwide (you and me) who got a better rate on a CD, money market or savings account from a bank that that was buying MBSs.   Ditto for those that got a lower insurance premium, free or lower tuition at a suddenly well-endowed private college, or even a lower interest credit card.
  • The Chinese workers who made the TVs and iPods we bought with our home equity ‘wealth’.
  • The Arab Sheiks, Venezuelans and Russians, when we needed more oil to propel the boom and were willing to pay more for it.

It was all an illusion.

It was fun while it lasted FOR EVERYONE.

Now please let’s not all go pointing fingers at each other.  It helps noone.

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4 Responses to “Useless fingerpointing”

  1. still thinking of one Says:

    You are factually wrong on a very important point, average CD rate 2000-2009 was the lowest for many decades, which brings me to a sharp rejection of your statement, not EVERYONE benefited.
    Personally I was hurt by the real estate boom. I was hurt by the historically low CD rates, by getting priced out of the market by refusing to gamble with less than 20% down payment. I did not flip houses bought with adjustable rate, I did not quit my job to grab for easy money with broker license. I refused to go along with the madness and now I’m being told to pay up for those for whom “it was fun while it lasted”. Make no mistake, the increased tax burden is going to fall on middle to upper-middle class because Obama’s reform is dropping tens of millions of lower middle class tax payers from rolls. This means that the number of voters impacted by higher taxes decreases dramatically, increasing the constituency for ever higher government spending and higher tax rates on the remaining few. The super rich, of course, will always be able to hide their money in trusts and off-shore. They don’t even have to do that. Apparently if you are a person of power or connections the only time you have to pay taxes these days is if you are nominated for Obama’s cabinet position. WTF is going on with IRS? Has the last incorruptible institution in this country gone department of Interior on us? The sad truth is that the only reason this country will thrive, retain, and continue attracting world talent is because as bad as things are here top to bottom most other places are worse. Though I’m tempted to check out Australia…

  2. maristi Says:

    Ha, I knew you’d take issue with this. OK, saying EVERYONE is a bit of hyperbole, but my point is that the bubble helped lots of people in every community and many countries, and for us to blame it all on a handful of individuals, and for the world to blame it all on us, is disingenuous.

    Actually, you were smart and waited, and instead of benefiting from the boom, you are benefiting from the bust, by low prices (50% off peak soon), choice galore, the lowest mortgage rates in almost 40 years and soon tax breaks or incentives.

    Thank you for your correction on CD rates. I made a faulty assumption: That if financial institutions were getting good returns from CDSs and CDOs that would translate to better returns to their depositors and customers. Where were these earnings going? acquisitions? bonuses? I’ll need to research this more.

    We’ll have to see if Obama does manage to close at least some of the loopholes for the super-rich and corporations. That was a key part of how he proposed to balance a budget while cutting middle-class taxes.


  3. Good points, it is useless to point fingers. This doesn’t help us solve the problems, plus like you said, just about everyone from every facet of life is to blame for the situation we are in, so why not look to the future, stop blaming each other and start doing things right.


  4. […] 20, 2009 I’ve argued that we all benefited from the bubble (before it popped).  I thought Taibbi’s piece on Wall […]


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