Tuesday, November 29, 2011

Too big to ignore

With so much changing in my near and midrange future, I can't help but think about events in the country and world over the past few years, especially the fall of 2008. It is particularly troubling for someone preparing to restart life geographically and professionally. As a business owner, it is that much worse. The economic events were so vast and deep that I am continually amazed that nobody saw it coming.

When we look at what actually took place, it is all so simple. Everything we did was predicated on the fact that the price of houses would never go down, yet we did everything in our power to drive them down, even if not purposely. Saturation of areas with houses and constant buying and selling invoked the law of diminishing return and an inflation at a rate that no balloon could possibly withstand without popping.

I speak often of intentionality and while it may not have been in the plan for bankers to disrupt and freeze credit, they plan of making more and more money alarmingly fast had so much collateral damage that there was no way it could have been prevented - once the ball got rolling anyway. There was so much greed and grandeur on Wall Street that even capitalists with deeply rooted beliefs, such as myself, cannot begin to imagine the soulless actions that went on. People can say that the homeowners should have known better than to buy a house they couldn't afford and definitely should have known better than to leverage that dollar and tack on a boat and a college tuition. One dollar cannot go three ways and still be worth a dollar each time. Yet, when the average Joe is handed the American dream by a professional, it is likely that "Joe" will put heartfelt trust in the answer and go with it.

The reason these Americans lost their homes, really is their own faults and it's not because they believed the banks. It's deeper than that. It's the lack of information I speak about so often. To this day, I can name, probably on one hand, but definitely no more than both, the amount of people that can explain how the greed that led to bundled mortgage backed securities, insuring the sold off slices and moving the risk of their books as well as the arrogance of AIG nearly sent us into the depression of the 1930s at an unfathomable speed (obviously generalized and truncated for this post).

What may be even more upsetting is how many people not only do not know what happened, but are grossly unaware of how close we all came to it. If I told the population at large that we were 5 days away from having no economy left, what would they say? Would they know that was the case or even believe me? Would they understand the concept of a credit freeze so sweeping that trucks stopped moving, shelves stopped getting stocked, things and money literally disappeared. A post-apocalyptic country would have emerged. January 2009 would have marked the beginning of a decades-long recession.

It's not that hard of a concept. The Street has been running on emotion and not on numbers for as long as I can remember and probably longer than that. No bank in the world can honor its debts if all creditors made a run on it. It's all based on trust and banks trust in each other. The absorption in our own personal worlds creates our own success bubble where we mostly don't think about all the moving parts involved. But all these moving parts have a profound impact on our own personal success bubbles. Our knowledge is limited to the news ticker on the bottom of the news channel that we see as we fill our coffee mugs and begin our transient day.

Our lack of information enabled all of this. I'm not exonerating the guilty parties, but it's hard for people to be guilty of immoral practices without people who conduct business with them. It's not entirely dissimilar to Nigerian scam artists "just trying to get your help moving money." They are wrong for doing it, but if you don't see yourself getting fleeced then you have enabled them to a large extent and should not have handed over money to a total stranger. How did you not see that coming?

So thanks to the greed of the bankers and the ignorance of the average American, my future success is potentially muted. I'll overcome the obstacles, whatever the cost. The point is, that I shouldn't have to. So America... read a fucking newspaper, balance a checkbook and pay attention to the world around you once in a while.

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