Thursday, January 21, 2010
"Its Actually Your Fault America"
I love it when people call it like it is. I just read this rather scathing blog about Pres. Obama's measure he's trying to push through today to regulate banks. I am in favor of bank regulation but I'm also in favor of telling the truth. I'll keep this short since this isn't a political blog (primarily) Enjoy
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2 comments:
I agree (as an Australian-American) it is the American people's fault for getting mortgages they couldn't afford, but...
it's also the banks' fault for financing ARMs knowing that the borrower would not be able to continue making payments when the rate went up, and...
it's the customer's fault for not knowing what they were getting into (or knowing, but not caring), and...
it's the banks' fault for not helping their customers make an informed decision about the ARM they were about to take on, and the LEG they'd be asked to pay later.
Yes, it is our fault for buying houses we couldn't afford, but it's also the banks' faults for lending money to customers they had to know would eventually be defaulting.
I'm not saying the banks being at fault absolves the people, but it's not entirely the people's fault; the blame is shared.
Unfortunately, regardless of whose fault it is, we're all paying for it now :(
These are scary times in which we live.
Don't forget the CDO stew. Banks wouldn't have gotten into the dicey business of making bad loans if they didn't have someone else (in this case, investors) to offload the risk onto. Hedge funds and market wonks love the idea of a perpetual 10% return annually. A ton of "financial advice" (even for individuals, especially with the Baby Boomers in retirement phase) is based on this sort of perpetual growth.
Never mind that it's mathematically unstable and impossible to play that game forever, the demand is there. CDOs were just one more piece of the alchemy financial wizards were trying to cook up to satiate the unrelenting American way of life, and the desire to have "our money work for us". (Shorthand for "do nothing and live off of other people's labor because you were lucky enough to have money to start with".)
Until we live within our means and stop trying to plan for retirement by making other people pay our way, we're stuck with this sort of Ponzi economy, always chasing the next golden promise of hope, change and free money. There will always be banksters or politicians to feed that desire, no matter the damage it does in the long run.
They aren't free of blame, but without the demand, the market wouldn't have gone to the lengths it has to perpetuate mathematical and legal fraud.
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