I apologize to readers normally arriving for the religious and philosophical content, but since Obama actually just spoke in my area I felt compelled to speak. (Also, I don’t see a real division between religion, philosophy, and politics… political views are just the manifestation of one’s world view). Since I watched it live on television I don’t have a link to a transcript, although I don’t think it will be necessary.
Obama did his typically slam in regards to the current economic crisis saying that we got into this mess because of ‘Wall Street Greed’ and that he would not allow a ‘welfare program for CEOs’ to pass. A lot of talk has been done pinning this on greedy CEOs with many conservatives pointing people to decisions made by Democrats as far back as Clinton. When Obama made his comments, the crowd cheered… and since this crowd ought to have known better, I’m speaking out.
In our area, home prices were going through the roof for almost a decade. We moved into the area during this boom and found it difficult to find affordable housing. The house we eventually bought was half the size of the one we had before we moved but we paid twice as much for it. I checked the court records of the house- we paid almost three times what it had been appraised at just five years earlier! Hmmmmm. A 300% return in five years? This was my first experience with ‘Main Street Greed.’
People were buying houses left and right, waiting a year or two, and then selling them off and taking the profit. We are not now talking about the ‘subprime’ borrowers, per se. But here is what happened, and La Crosse area residents ought to have known better: when you take that profit and try to buy another house, that house too has its value inflated, so in the end you got ‘more house’ but not much else. In other words, people raking in these profits hurt themselves in the end because in order to get a new home for themselves, they had to pay someone else’s hyperinflated price. For a long time, this cycle continued, no doubt largely because of the easy access to large mortgages, but that was only part of the reason. The other part was that the people themselves were greedy.
I don’t know how representantive this is to the whole country but I suspect it very much is. All this talk about Wall Street greed is misplaced when it is opposed to the implied helpless innocence of the individual consumers on ‘main street.’ There is talk about preserving home values… but of course home values were grossly inflated. You might say that the mortgages were perfectly legit since they were tied to legit appraisals and since the borrowers were 100% credit worthy, we’re not talking about an abuse at the Wall Street level.
So what should have been done? If I can get $20,000 more for my house, even if that value was tacked on in only the last year (a hypothetical!) I can see myself taking that in a heartbeat, especially if I know that I can buy a bigger house and get the mortgage for it. The problem I think needed to be handled much sooner, while values were still reasonable. I have no solutions… but I do protest trying to pin this all on Big Business and Wall Street, and even Big Government, without taking a look at our own role in the affair.
And incidentally, I am wondering if at any point some insightful and fair minded liberal who perpetually tries to paint Republicans as being in the pocket of Big Business will notice that some of the fiercest objectors to the ‘bail out’ are Republicans. If they were in the pocket of Big Business they’d want to bend over backwards to sneak a few more dollars their way. Nonetheless, it is in the conservative camp that you are hearing calls to allow these businesses to fail… how does this jibe with the accusation they are in the pocket of those businesses?