Tuesday, September 30, 2008

The end of life as we know it...

Well, we knew this was all coming, didn’t we? Are we surprised? Shocked?

What in the heck do we call this thing? A financial debacle? Wall Street crisis? Credit card cave-in? Home mortgage wreckage? The end of life as we know it?

Whatever it’s called it’s long overdue, as inevitable as the rising sun. But what I’m finding rather despicable about the whole thing is the finger pointing. Who’s to blame for this mess? Last night, meandering through the Memphis airport, I caught a quick glimpse of a TV screen, and some jamoke was blaming this whole mess on some law that was passed back in the eighties that, he was postulating, twisted banks’ arms and forced them to loan money to poor people who couldn’t get loans in the first place. Nice try. Blame it on poor people. Especially, in this case, poor non-whites.

I think we’re all to blame in this one, don’t you think? We’re talking greed on a colossal level. Biblical proportions.

American’s standard of living was off the map. Sure, people were taking out home loans that they couldn’t afford. Or maybe they thought they could afford. Variable interest loans, balloon loans, all those financial instruments all those wizards on Wall Street were throwing together gave people some hope. Maybe times weren’t good for people at the time, but in five years they threw the dice hoping things being better. Anyone who bought a house in the inflated housing market in the last fifteen years knows darn well at some point the real estate agent they were working with would say that their financial guy could “make this work,”—this being the deal, closing on the house. So people were overextending themselves, and they shouldn’t have put themselves in that position. But at the bottom of all that wasn’t so much greed as it was just wanting a piece of the American dream. A home they could call their own.

While it seems there were those who were just hoping to hang onto their homes—these were the poor the guy on the TV was blaming—there also were those who had homes with plenty of equity in them and the owners just drilled that equity like they were drilling for oil, double and triple-mortgaging their homes so they could buy all the stuff to fill that big MacMansion and bankroll a lifestyle that was way beyond their means.

In the housing market though, a good solid amount of that blame goes on the banks, who were supposed to evaluate and manage risk. You can’t tell me there’s a bank in this world that would risk the way they did if it weren’t for Wall Street coming up with all these ways to package all this bad debt and unload it on someone else.

It seems to me from what I’ve seen of the people in my own life, the blame for the credit card debt seems to fall the same way. There are people who just spent, spent, spent, laying down the plastic for the big-ass flat screen TV or vacation to Cancun, and there were people who actually needed the plastic to get buy, paying utility bills and gas and groceries, just getting by month to month. For both types of people, they just robbed Peter to pay Paul, maxing out one credit card, then applying for another and either transferring the debt to a card with a lower rate, or just filling that one up, too.

To me, it seems the farther up the ladder you go the greater the blame until you reach Wall Street and the halls of government. Wall Street—the experts who knew this all was bogus, were reaping the benefits on a level that none of us could imagine. And Washington, meaning Congress and the Fed and President Bush himself, who was joining the us all by borrowing money from China to play out his war in Iraq, knew this was destroying the country but didn’t nothing.

I, like most people, am scared out of my mind. I’ve been working for the past two years to completely eliminate any debt I have. I’m close. It’s a good feeling. I live within my means, and if I don’t have the money in my pocket to buy something, well, it simply means I can’t afford it and I go without.

Yes, right now I’m typing these words on a plane, coming home from a trip that we saved for. There was a lot of things we did without to finance this trip, and we did a lot of it on a shoestring. I don’t feel an ounce of guilt enjoying something that we worked damn hard to have. We like to travel, and that’s what we put our money towards.

And what’s ironic is that we flew to Austin on Northwest that was hurting and realigned its business and one way it did that was buying smaller, more fuel-efficient planes. And all four planes we flew on on this trip were built, not in Seattle by Boeing or Lockheed but in Brazil. When did Brazil pass up the United States in airplane manufacturing? I’ll tell you: It was right about the time the United States tried making money by selling bad debt instead of making good products, that’s when.

There was a point in my life where things were tough, and I was using my credit cards simply to live. Pay the oil bill. Pay for the phone. Pay for the Internet connection that I used for work. Pay for groceries. I pulled a lot of money out of my 401k, figuring the substantial hit I paid in penalties was still better than stretching out payments with high interest rates. I lived on a lot of rice and Ramon. That’s what I’m still paying off now, and I’ll tell you, Citibank, Amex, and all the rest weren’t sympathetic to me. They didn’t bail me out. Nor would they negotiate a lower rate even as I showed progress paying off the debt.

And I don’t want to go back to that. I’m worried right now that the money we make won’t be worth anything. That a bag of groceries will cost $100. Jobs will be scarce. Life will get so hard that people will start taking it out on each other. And maybe in the end, that’s the lesson learned here. We’re all to blame for this, some more, some less.

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