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The dim reaper

SoVaNow.com / February 26, 2009
What a prize for a press corps we have in this country. I was pecking away at the keyboard last Friday afternoon when my brother called and told me about this Santelli guy going off on CNBC. Come to find out later that correspondent Rick Santelli's rant against the Obama Administration's mortgage relief plan was an instant media sensation, drawing only slightly less page views on the Internet than the Bible has received throughout recorded history. Jeremiah had nothing on this Santelli guy. Reap the whirlwind and all that booyah!
I finally got around to watching the clip on my computer and thought: This joker can't be serious. I mean, there was Santelli, the preening, self-appointed spokesman of the pitchfork mob, railing against giveaways that supposedly spring out of the Obama proposal like buttercups. I don't know about all that, but if underwater homeowners are indeed receiving undue consideration from the federal government they're only number 3,286 on the list. Where was the Great Santelli when the feds (and I include the Obama economic team in this) were dumping hundreds of billions of dollars into the banks? Why hasn't he personally storm the gates at Goldman Sachs? Why is it that CNBC works up a lather only when the government intervenes in the markets to help ordinary homebuyers?
It's hard to imagine a more inapt image than Rick Santelli, correspondent for CNBC, at one time perhaps our biggest cheerleader for the House of Cards economy, prancing around in front of a bunch of Chicago traders and railing about how Obama is ruining the country by (fill in the blank). This is truly bizarro world stuff. Santelli kept asking the folks back home if they wanted to pay for someone else's kitchen, as if that's the number one problem facing the U.S. and worldwide economy. How about paying for someone's trillion-dollar mortgage derivatives losses? Santelli should have asked all the financial types surrounding him what they thought about that.
We need to come to grips with the question of culpability for our current economic straits. There's no doubt that a not-insignificant number of homebuyers share a measure of blame, especially people who played the housing market like a craps game and got burned. (The Obama plan reportedly denies debt relief to borrowers who engaged in the speculative business of flipping homes in the belief that prices would always go up). The problem with deciding that everyone deserves some of the blame, however, is that all of sudden you end up in a world in which no one is to blame. It's the old "mistakes were made" dodge. Only people with alleged anger issues ask the follow-up question: "By whom?"
Here's who: former Federal Reserve Chairman Alan Greenspan, followed by a parade of free-market snake oil salesmen in both the Clinton and Bush administrations who thought self-regulated capitalism would unleash its glories on the world. Well, they got the "unleash" part right. But what this orgy of excess and greed got us in the end is an economy on the brink of ruin, following one of the greatest giveaways of the public wealth in American history. Someday our economists will have a better appreciation for the dangers of extreme inequalities of income, but until then we'll have to comfort ourselves with news of Wall Street executives who continue to hand out billion-dollar bonuses while their companies are clinging to life on the public dole, the poor dears.
One more thing to keep in mind: all this borrowing that took place which now has millions of American families in the red, this happened for a reason — and personal irresponsibility is only part of the tale. Another aspect is that personal incomes for most middle-class Americans have been stagnant (or worse) over the past decade. When income growth is lacking, and what wealth creation you have is measured in rising property values, well, it's no surprise that people would seek to extract some of this newfound largesse from their homes in the form of home equity loans and other quick cash conversions To get out of our current mess, we first need to address this issue of flat-lining incomes through the creation of better-paying jobs and a more progressive tax system. Easier said than done, I know. But one thing we can all be certain of: the economy won't grow again until people are more confident about what's in their pocketbooks. Contrary to popular opinion, Americans don't need to hide in their holes waiting the storm to blow over; the storm will blow over only when people emerge from their holes and start spending again. But this time there's got to be a reasonable foundation for our consumerist ways; this business of piling debt on top of debt with no visible means of support has got to stop.
At times like these, there's only one entity that's big enough to grab the economic rudder and turn the ship of state around: the federal government. This is one reason why the right-wing solution of cutting taxes for the well-to-do is just downright dumb. Aside from the fact this approach has been tried over the past decade and been found wanting, there's also the problem of just how you cut taxes in a meaningful fashion when so few people are making much money in the first place. Zero income, zero taxes: Now there's a cut for you! The stimulus plan enacted by Congress certainly isn't perfect, but it does offer the promise of getting the economy moving again. That's an important first step, but it needs to be accompanied by tough rules to ensure integrity of the markets going forward. A rethinking of the bank bailout should be at the top of the list. Again, not pretending to be an expert, but anyone who's ever watched late-night movies knows the score: Do not be taken in by zombies with their deceptions, lobbyists and flesh-eating ways. When zombie banks are roaming the land, destroying everything in their path, what do you do? Why, slay them, of course, and slay them now!
A friend sent around the following e-mail after reading a piece in Time magazine titled "Top 10 People To Blame For The Financial Crisis":

Interesting, but most of these were just players who seized opportunities after the easy money strategy was put in place by Greenspan. When the doors of the candy store are thrown open, the kids will find all manner of creative strategies to stuff their pockets. To ask them not to do so, and blame them after the fact, flies in the face of all we know about human nature. As the former head of Merrill Lynch or was it CitiBank said, "When the music plays you gotta dance" ….
Recall that housing, land speculation, and the financing of same was the only industry which was making money at scale after 2001. You can bet that Greenspan's lower than low interest rate strategy had the support of all the politicians who then mattered. How else were we going to finance the country's ambitions? We had run out of ways to make money at scale by making or doing things people needed, i.e. absent a speculative bubble.

I would only add that back in the late '70s and '80s, Paul Volcker was chairman of the Federal Reserve, and it was not uncommon to hear him described as the guy who would take the punch bowl away when the party got too wild. It's the nature of politicians to lose all sense of restraint when times are good (and not so good), but our financial system is predicated on a Federal Reserve that's supposed to be independent of the political considerations of the day. Why Alan Greenspan decided to pour more vodka into the punch bowl is a subject for another day, but, my, how this hangover does hurt.

***

I've been meaning for some time to offer a word of praise for the Town of South Hill, which has done a lot of things lately to address one of Southside Virginia's biggest shortcomings: the lack of things to do. Oh, I know, there are already a lot of things to do in the area that people never take advantage of, but does anyone seriously believe that our quality of life won't benefit from the Colonial Theatre, or the Tobacco Heritage Trail, or the Meherrin River Blueway Trail? South Hill happens to be the driving force behind two of these three projects, and it also did the area's youth a world of good when it built new ball fields at Parker Park. Now South Hill, and La Crosse, too, are working to establish skateboard facilities where the kids can go to skin themselves up in glorious and (relatively) safe fashion. Skateboarding ain't my thing, but if the towns call pull off this project they will have done themselves, and their young people, a huge favor.
The New York Times recently published an article on skateboarders that raised my estimation for them considerably. The Times looked at a number of resort communities that have been hit hard by the foreclosure crisis and found teenage skateboarders were going around to abandoned homes and draining their fetid backyard pools. (Everyone in southern California apparently has, or at least had, a pool). The point was to create new skateboarding venues, with kidney-shaped pools apparently offering the sternest test of skills. Skateboarders used the Internet to organize this civic activity, with their own chat rooms and web sites and such, so maybe it was inevitable that a skateboard punk would nail the current economic crisis with the élan of Tony Hawk doing a midair spin. "God bless Greenspan," read a post on one Web site, "patron saint of pool skatin'." Too bad the rest of the country hasn't figured out as much.

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