Thursday, October 16, 2008

The Blame Game

While the smoke continues to pollute the environment in the worst economic conflagration most of us have seen in our lifetime, it is time to confront the issue of who to blame. Here is my blame list.

I blame all the sad dreamers who believed you could buy a house for little or no money down and the rest on borrowed money, absurdly convinced that the market for this house would continue to rise. Like any commodity real estate goes up and down. Nothing goes up forever. Worse, the purchase of a house is the first step in an avalanche of expenses, furniture, appliances, carpets, TV sets, things, lots of things. If people who bought a house they couldn’t really afford and all the things that went into it, how did they think they were going to pay for it? How did they buy into the notion that they were entitled to such largesse?

I blame all the pandering and plundering politicians of both parties for passing the laws that made it so easy to purchase these houses for little or no money down. They just threw the faux red meat to the gullible crowd on the premise that the more you give away, the more people will vote to keep you in office. Beware of a politician’s promises. They have one goal that motivates them: to get elected and re-elected. A politician’s office becomes an election campaign headquarters the moment he or she gets elected.

I blame all the lobbyists for bankers, mortgage brokers, stock brokers, housing advocates, the real estate industry, the credit card industry and all those who would profit from the never ending tsunami of profiteers who were paid to persuade (make that bribe) the clueless politicians to pass the laws that made it possible for people to buy a house for little or no money down that they could not afford to sustain.

I blame the army of greed-driven brokers, bankers and lawyers who cut themselves fees from the people who bought the houses for little or no money down, then sliced the mortgages which paid for them, then mixed them up with allegedly safer mortgages and sold them as “risk free” certificates to suckers all over the world.

I blame the politicians for taking the money from the lobbyists in exchange to do their bidding. Never believe a politician who takes this money and says it won’t influence his or her vote. I blame the voters who don’t do their due diligence on the politicians who seek their vote. If they elect clever manipulators who have invented themselves out of whole cloth, who are modern day snake oil salesman interested only in their own personal ambition and ego satisfaction, then they have only themselves to blame. Don’t look for solutions from people like these. Invariably they will make things worse.

I highly recommend an obligatory course in legislating and governing for every politician in the country presently in office or any future aspirant, and declare ineligible any potential candidate that doesn’t get a get a high passing grade and has submitted to a lie detector test. My estimate is that more than ninety percent of the present crop of politicians will flunk the course.

I blame all the fools who paid for things by credit card and extended the debt on these cards, paying ridiculously inflated interest rates resulting in a process from which they will never ever catch up. Indeed, they are going up the down escalator and they will almost never reach the top. Anybody that lets debt mount on a credit card needs a refresher course in simple arithmetic.

I blame the credit card companies for promoting these plastic time bombs to people of all ages who are persuaded and manipulated to take these cards and can’t afford to pay the debt they incur within thirty days. Credit card issuers make their money on the debt from the poor saps who allow themselves to continue to pay these pony interest rates that will eventually destroy their ability to ever get credit again.

I blame the parents of kids ignorant of the realities of debt who allow them to get credit cards to instantly gratify their adolescent desires. And I blame these stupidly indulgent parents for not teaching their children the value of thrift and savings.

I blame the educators and the bureaucrats who run the sadly dysfunctional educational establishment for not creating programs to teach young people about economics, the dangers of overextended debt and the value of thrift. It is an essential ingredient of a good education to prepare a child for real life. While we are at it, how about similar programs for adults?

I blame the pompous and self-inflated idiots on the boards of companies who receive high payments to serve on these boards and reward the CEO’s of these companies with astronomical high pay. The people who they screw are the stockholders they purport to represent and, of course, the rest of us. As for the stockholders, why are they not storming the ramparts?

I blame the advertising industry and all the manipulators in the media for persuading people to buy things whether they can afford it or not. Beware of the words free, bargain, discount, special sales, once in a lifetime and all those soothingly false pictures of people allegedly living the good life. Check it out. Be wary. Be alert. Never buy anything endorsed by a celebrity. Their praise is pure baloney. They are trying to get you to part with your money. If you buy into it and you can’t really afford the product they tout, the consequences are your own damned fault.

As for the current election, maybe the best course for all of us is to vote present. It seems to have worked for at least one candidate.

Most of all, I blame the DNA of the human animal that has made us slaves to our desires, dreams, hopes, aspirations, yearnings, fantasies, pleasures and cravings. Somewhere in that double helix construction there must be a yet undiscovered fault line that is responsible for an errant stupid gene floating aimlessly somewhere in the brain.

All that said, if you really want to find the true culprit, look in the mirror.

Warren Adler is the author of 30 novels, including The War of the Roses and his latest, Funny Boys.


Remind Myself said...

Recently an insurance company nearly wind up....
A bank is nearly bankrupt......filing chapter 11 protection.
How it affect you? Did you buy insurance? Did you buy mini note or bonds?
Who fault?
They bailout trouble finance company, but they will not bail out your credit card bills…….Should they have use the bail out $$ to pump into all different industries instead ……You got no choice, and no point pointing finger but you can prevent similar things from happen again……
Are you a partisan?
Since the bailout already done, the question now is besides letting the economic back on track, what regulation should be done to prevent similar things from happen again…..

The top management of the Public listed company ( belong to "public" ) monthly salary should be tied a portion of it to the shares price ( IPO or ave 5 years ).... so when the shares price drop, it don't just penalise the investors, but those who don't take well care of the company.....If this rule is pass on, without any need of further regulation, all industries ( as long as it is public listed ) will be self regulated......because the top management will be concern about their own pay check…… Instead of spending big money on hotel stay and luxury function……..Top management get monthly salary and director fee, while shareholders & investor get dividends….So those shareholder cum management get…..
Whenever anywhere, anytime, there is election campaign.....We can use this to question your candidate there….. if you agree on my point, please share with many people as possible.... Finance and Media are the two only industries can shaken politics ( Maybe Hackers can ), please help to highlight also...

Also recently some comments say that Respectable Mr Buffet had start buying, yes, he started buying with guarantee return of 10% annually….. Do we individual investor had the same offer…. If yes, I will definitely join in and buy……and the institution will definitely wouldn't short of money if they offer the same terms to the individual investors..... When ever in the history previously did Mr Buffet claimed that he bought shares.....

Facebook, come and join as a friend and share with your friends…..

Just image, Institution lent out the shares already, in their hand, they don't have any stock or shares already, but Institution know that in the market, there are those individual investor who borrow the share going to sell the stock, so Institution naked short also, because there is no restriction on those Institution that those stock or shares that lend out, cannot be trade by the institution at that moment.

BobK said...

Hi, Warren,

Thanks for your newsletter and these articles. I have great respect for your work, but I often consider myself the loyal opposition to your social and political viewpoint. You obviously strain for rapprochement from the conservative side of the table.

>I blame all the sad dreamers who believed you could buy a house for little or no money down and the rest on borrowed money, absurdly convinced that the market for this house would continue to rise.

Ah, but when? I was one of these sad dreamers in 1998, when my wife and I bought a very modest house in the Seattle area for the then-ungodly sum of $200,000 dollars on an 80-10-10 mortgage, that is, eighty percent on the primary, ten on a line of credit second mortgage, and ten down. My wife's job at the time didn't pay well, and I worked on intermittent contract, so our financial situation was precarious. Since then we've paid off about $40,000 dollars of the principal, and the house has appreciated by about sixty-five percent, so even if housing prices drop by half, we won't be under water. We could be smug about the foresight and prudence that elevated us to the lower middle class, but, honestly, we got lucky with the timing. Had we gotten into this house a couple of years ago, we'd be struggling to make payments and now have negative equity.

My wife and I are well educated and hardworking and we don't spend lavishly, but those traits are no longer a hedge against disaster. While I don't dispute that your unweighted list of people to blame is accurate as far as it goes, the majority of the blame needs to be leveled at a government that failed to regulate housing and banking, and pursued the old failed guns and butter strategy in prosecuting an unnecessary and very expensive war.

>As for the current election, maybe the best course for all of us is to vote present. It seems to have worked for at least one candidate.

Ah, a dig against Obama. No, the best strategy is to vote against McCain and the Republicans in general. Their project to dissolve the middle class that produces the majority of our wealth will destroy our country. The middle class pays welfare for both the poor and the rich, but despite what the Republicans preach, welfare for the rich eclipses that for the poor. Also despite what they preach, we already have socialized healthcare, just poorly socialized, so that taxpayers foot the bill for those who can't afford their emergency-room visits that would have been obviated if they'd had regular maintenance checkups and treatments.

We must devalue the so-called "American Dream" that each of us might strike it fabulously rich and endlessly indulge expensive pleasures. Some of us merely want rewarding work; modest housing; simple, affordable food; reliable, affordable healthcare; clean air and water, and access to good libraries and natural beauty. We are being victimized by mindless gluttony from both parties to be sure, but the Republicans actively celebrate it.

Bob K.