An alert reader recently sent me a link to a 1999 NYT article that explains why we're in the financial crisis we're trying so hard to legislate away. This article was written 9 years ago to the day that the current administration's fix-it plan was voted down.
NYT September 30, 1999: Fannie Mae Eases Credit To Aid Mortgage Lending
Who is to blame: the Clinton administration for forcing Fannie Mae to buy riskier mortgages in an effort to increase minority home ownership? The Bush administration for failing to foresee the unintended consequences and rein it in? The big banks who followed one another like lemmings into ever riskier sub-prime markets? Greedy and shady mortgage brokers and house appraisers who arm-twisted unsuspecting homeowners into ARMs and interest-only mortgages that could only succeed if housing prices continued to climb year after year? Gullible and covetous consumers who knew they couldn't afford that McMansion but bought it anyway because the bank said they could?
My two nearest neighbors have been foreclosed, and their houses sit empty and bedraggled because they got sucked into sub-prime mortgages. We tried to bail them out, but their financial situations were almost cartoonishly impossible. There was no way out for them but to sit idly by and let the bank evict them.
Shame on all of you who let this happen, or made this happen, or could have put a stop to it and didn't. Shame on all of us for wanting more than we can afford, and living above our means just because the credit card company or bank says we can. Shame on you politicians currently making political hay over the heartache and loss of millions of us enmeshed in this travesty. Shame on all you Wall Street types standing hat in hand waiting for the government to bail you out so you can start anew bilking small-time investors out of their hard-earned retirement funds.
I don't know anything about ING Direct, since I don't have any money invested in their company, but they published a full page ad in a bunch of newspapers yesterday (shame on them for trying to get more customers by referring to this crisis!). They have published a declaration of financial independence with 10 points that I have always lived by, and recommend that you do as well.
BTW, don't be fooled by the pols who promise that this $700B bailout will be cheaper than that because some of the toxic investments will actually bring some income back to the taxpayer "investors". The government's accounting system is a giant shell game, and any taxes we pay in whatever form (including those we'll have to pay to make up the $700B bailout) are already spent by our elected officials. Any "payoff" from this cash infusion will inevitably cycle back to somebody's porkbarrel project.
I'm bracing for higher taxes, less services, and no real breakthrough in the credit crunch with this bailout. I no longer look to the government to look out for me and my interests; heck, I've stopped including estimates from social security and medicare when I calculate my retirement needs, because I just don't have faith in those programs or the system that backs them.
Audacious hope? Sorry Barack, I don't think so. If you think a new administration is going to fix any of this, you're worse than Don Quixote: you're tilting at phantom windmills. Fool me once, shame on you; fool me twice, shame on me. Once upon a time I believed that a man or a party could change the world for the better, but I don't anymore. One man's utopia is everybody else's dystopia. Live and let live. Down with government. Long live gridlock. Remember the law of unintended consequences, it works best when the plan is big and complicated. Like the bailout plan.
And I'm usually an optimist...