28 September 2008

Late-September News Notes

A.D. Freudenheim, The Editor

I am working on a few different columns, which I will finish and post over the next couple of weeks. In the meantime, I want to draw attention to some different stories and news items—some of which have received a lot of attention, and others not nearly enough.

Story #1. Political repression in America is alive and well. NPR’s On The Media had this story yesterday by Amy Goodman about the arrests of journalists at the Republican National Convention.

Story #2. When the conservative National Review runs an article suggesting that GOP vice presidential nominee Sarah Palin should step aside for the good of her party, well, then you can’t help but wonder whether Palin should step aside, for the good of McCain, her party—and her country.

Story #3. In case you have not figured it out, this Wall Street “bailout” is a bad idea. How could it not be a bad idea to give a $700 billion, taxpayer-funded allowance and free reign to the Secretary of the Treasury to play at fixing problems that may be caused by some combination of stupidity and greed. And so we go back to On The Media, where David Cay Johnston breaks this whole story down rather nicely.

Story #4. To me, this is the biggest, most important, and most ignored news story of all, bigger even than the $700 billion Wall Street “bailout.” I remain transfixed—and angered—by a story that has best been covered by Alex Blumberg for This American Life, in the episode known as The Giant Pool of Money, and related stories like the one about Philadelphia sheriff John Green. It has been ignored by the Republicans as much as by the Democrats because it meets neither party’s traditional story lines and (of course) would only anger voters. But for all that, it remains demonstrably true: the average American has just as big a role in and responsibility for this crisis as any Wall Street player. It’s easy—too easy— to blame creative investment bankers for creatively collateralizing everything they could get their paws on. It’s easy—too easy— to blame over-inflated executive pay.

No one wants to talk about the greed of the average American. The Americans who, for the last 7+ years, have happily spent all cash rather than made any serious attempt at saving money. The Americans who have steadily sucked every dollar of equity out of their homes and other assets, in order to keep shopping freely—without understanding the impact of the interest rates on those loans. The Americans who decided it would be easier to believe that a 0% adjustable rate mortgage would stay at 0% then invest in understanding the details of their loans. The Americans who have consistently responded to offers for new credit cards, without being able to pay off their debts and, again, without understanding the impact of the interest rates on those loans.

There’s a crazy plan being circulated by a guy whose e-mail is signed “Birk T. J. Birkenmeier, A Creative Guy & Citizen of the Republic.” At first glance, his plan sounds alluringly populist: what better way to help the American people than to give them the billions of dollars instead! What’s wrong with it? (Aside from the math?) Here’s what: hey, Mr. Birkenmeier: those are my tax dollars you’re sharing!

I am not unsympathetic to people who have lost their jobs, had trouble financing their life and paying for the necessities for their children, or who (as a result of all this) have lost their homes. It saddens me. But too much of the current financial crisis is not about that. It’s about people, average people, looking to make a quick buck without bothering to understand the potential consequences of their actions. It’s about people at every level of our society acting out of greed, and not intelligent self-interest.

What’s the difference? Intelligent self-interest is looking for the best, cheapest loan for the best, cheapest house you can afford. Greed is fooling yourself into thinking you’re doing that when you know, deep in your heart, that you aren’t.


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