A toxic confusion
Phil Dillon, Emporia
Tuesday, October 14, 2008
THE TERMS being tossed about in this global crisis are mind boggling — mark to market, credit default swaps, collateralized debt obligations, teaser rates, ARM’s, Fannie Mae, Freddie Mac, sub-prime, derivatives, Sarbanes-Oxley, Gramm-Leach-Biley, negative feedback loops, mortgage backed securities. With each passing day come new terms and increasingly frightening news about financial exposure. A month ago, the Fed began injecting billions of dollars into the “system.” A few weeks ago regulators hoped that $85 billion to prop up AIG might solve the problem. Late last week public exposure was about $700 billion. Today, in testimony before the House, we learned that exposure in credit default swaps is somewhere in the neighborhood of $60 trillion, more than the entire world’s annual GDP!
While the exposure numbers reach into the stratosphere, the stock market is flirting with a crash. In the past month the Dow has lost between fifteen to twenty percent of its value. In some parts of California entire communities have been foreclosed on and abandoned. Here in Lyon County foreclosures for the first nine months of this year have increased by 57 percent from the previous year. Credit markets appear to be seizing up. Inventory needed for production hangs in the balance. The well of credit desperately needed to meet payroll is running dry. Today, as world leaders meet in board rooms to slowly hammer out solutions and our Congress holds hearings, the crisis spirals downward, moving at the speed of the Internet.
Is it any wonder, then, that we’re every bit as angry as we are confused? A Pew survey taken a few days ago revealed that 54 percent of us are paying a lot of attention to this crisis, yet 43 percent of us are confused by it. In fact, the more information we get, the more confusing and conflicting it seems to be.
The strange mixture of interest and confusion is becoming every bit as toxic as many of the sub-prime mortgages entwined in this crisis. The only avenue many of us feel we have left is to express our outrage. Democrats blame Republicans; Republicans blame Democrats. Proponents of regulation blame laissez-faire capitalists and vice versa. The cycle of blame seems to stretch to infinity, but it may only be the tip of the iceberg. As the anger mounts it’s becoming more personal, more visceral. As author/futurist Francis Fukuyama noted this past Sunday, “The quality of political debate has been coarsened by partisans who question not just the ideas but the motives of their opponents. All this makes it harder to adjust to the new and difficult reality we face.”
One of the constants in this crisis has been our uncanny ability to hold ourselves guiltless. We assume that we had nothing to do with this mess. Yet, many of us took second mortgages on our homes to fund that dream vacation we just couldn’t live without. We bought meals at Applebee’s and trendy bistros, Hummers and SUV’s, or designer clothes and shoes using plastic, to the collective tune of $2.4 trillion!
It all sounds eerily familiar in the light of history. Many in the 17th century mortgaged their homes so they could buy a single tulip bulb for $75,000, betting that their investment would reap huge rewards. During the “roaring twenties,” millions bought stock “on the cuff,” certain the only direction was up. On Jan. 28, 1986, after days of delay, internal wrangling, and public impatience, NASA mission STS 51L lifted off from Cape Canaveral. About a minute into the flight mission control issued the command, “Challenger, go with throttle-up.” At 73 seconds, Challenger disintegrated.
Since the early ’90s it has been, economically speaking, “Go with throttle-up.” In the wake the economic disintegration we’re confused, angry, trying to make sense of it all. We’re groping in the dark, hoping that there is a Churchill, an FDR, or a Reagan who will help us navigate the troubled waters. We hope, but no one seems big enough to answer the call.
In the face of crisis and recriminations I think back to stops made at mile marker 109 on the Kansas Turnpike, gazing out along the tallgrass, keenly aware of my smallness and vulnerability, yearning for the consolation of the ages, realizing there are places where “moth and rust don’t corrupt.” Where, then, should I anchor my hope? In this age of Fukuyama’s “new reality” I find myself once more crying “Maranatha,” clinging to the age old hope of the eastern sky being split at dawn by the Parousia.
Phil Dillon, who is retired, was a candidate for Emporia City Commission in last year’s election.
bdprotheroe (anonymous) says...
I still say the best resolution to the debacles created and lingered over by Congress is to "flip the House." Specifically, if every American set aside the partisan leanings and voted for "the other guy/gal," Congress might become worthy of our admiration and praise.
(There is no pun towards the two U.S. Representatives I will refer to in this example.) If the voters in Kansas' 1st District were to elect the Democratic nominee over Jim Moran, and if the voters in California's 8th District voted for the Republican nominee over Nancy Pelosi, I think we would see a much more productive and conscientious House of Representatives. You have to admit, a Democrat from Kansas and a Republican from California are going to have much more in common than the current delegations. They will be less likely to engage in partisan politics/bickering and will cooperate for the common good of the nation.
As comedic as it may sound, just consider this proposal for one moment.
Brian Protheroe
San Francisco, CA
October 14, 2008 at 4:14 p.m. ( permalink | suggest removal )
shoehorn (anonymous) says...
Matthew 6:34 Be not therefore anxious for the morrow: for the morrow will be anxious for itself. Sufficient unto the day is the evil thereof.
October 14, 2008 at 4:19 p.m. ( permalink | suggest removal )
create (anonymous) says...
I'm a bit more optimistic about what is coming soon than standing out on the prairie looking for the second coming of Christ.
While I realize the writer is just being dramatic, I am still reminded of Reverend Hagee. Remember him? He is the leader of Christians United for Israel, a fringe sect devoted to lobbying Congress to stop the Israel-Palestine peace process. They are also interested in waging preemptive military strikes against Iran. The relationship is that they believe that Armageddon is near and that the Jews in Israel are the last piece of the puzzle left to be put into place in order to bring about the return of Christ.
Hagee and his followers claim that God sent Hurricane Katrina to the U.S. as punishment for its role in helping to remove Jewish settlers from Gaza. They equate the thousands of homeless in New Orleans to the 9,000 Jews living in tents after being expelled from their homeland in Gaza.
This group had offered support to John McCain but in March of 08, he rejected it.
October 14, 2008 at 4:41 p.m. ( permalink | suggest removal )
shadou (anonymous) says...
From a man far wiser than thee, Mr. Dillon.
http://money.cnn.com/video/ft/#/video...
October 14, 2008 at 5:05 p.m. ( permalink | suggest removal )
open_eyes (anonymous) says...
Haven't you heard, create? Louis Farrakhan recently referred to Obama in a speech as "The Messiah". So your optimism DOES include that..... LOL..... kidding.....
Seriously - good points, Phil.
October 14, 2008 at 7:03 p.m. ( permalink | suggest removal )
shoehorn (anonymous) says...
Are you really serious about the video link to money,cnn? The clown is a talking head for Obama! Why don't you do yourself a favor and do some serious research. It started in 1977 with the Community Reinvestment Act. This was such a wonderful idea that it was expanded in 1994, and then the rules were rewritten in 1995 so that quotas could be set and monitored. Check out who Fanny and Freddie gave the most money to in congress.
October 14, 2008 at 8:43 p.m. ( permalink | suggest removal )
kseyetie (anonymous) says...
As Michael Douglas said in the movie Wall Street, "greed is good." A 'christian' nation should not support this, but we do. Now we are paying for the lack of oversight and its related greedy behaviors by those who own the country.
October 15, 2008 at 8:08 a.m. ( permalink | suggest removal )
create (anonymous) says...
We keep hearing the phrase, "...plenty of sin to go around." It's true. Everybody, not just Washington, is responsible for this economic meltdown. Many people took out mortgages they couldn't afford and are now complaining that they didn't understand it was an ARM. What???
Yes, those hot-shot financial plunderers were preying on the weak, but it also got to the point where sensible people were taking out second mortgages (or the euphemism "home equity loans") not only to make home improvements, a sensible expenditure, but they also used home equity to go on vacations, to play the stock market, or to buy big, high-dollar SUV's. I never could figure out why anyone would use home equity value to buy a depreciable item like a car. Certainly, not all struggled under the burden of two mortgage payments, but many did. Before long, foreclosures were taking place. They're responsible too. Someone may tell me to mind my own business. But it is my business if my tax money is being used in the bailout (or the euphemism "the rescue plan") to fix bad debts.
Hopefully, the newest plan just unveiled, investing in the banks, will thaw some frozen credit and result in the promised 5% return to the taxpayer. I can see where that would work so I'm optimistic about that too.
October 15, 2008 at 8:55 a.m. ( permalink | suggest removal )
goodoleboy (anonymous) says...
shoehorn,
McCain is in bed with Freddie and Fannie just as much as Obama.
http://politicalticker.blogs.cnn.com/...
October 15, 2008 at 12:58 p.m. ( permalink | suggest removal )
josiesbar (anonymous) says...
I'm not worried. If my business is going to fail because of the slow economy, I am sure I can convince the city commissioners that Josie's is vital to Emporia's nightlife, and in order to keep Emporia's nightlife from complete collapse, we will need a $100,000 bailout. We will be closed for one week though, because I am sure that my employees will need to be calmed down over the whole incident, and we will all have to go to a private hotel in Malibu for a week. Alright, see you later, I have a commission proposal to write!
Matt
October 15, 2008 at 2:43 p.m. ( permalink | suggest removal )
momus (anonymous) says...
Instead of a hotel, may I suggest a hunting trip?
http://www.msnbc.msn.com/id/27201970/
October 15, 2008 at 3:20 p.m. ( permalink | suggest removal )
Happiness08 (anonymous) says...
The Bible also says "It is easier for a camel to go through the eye of a needle then for a rich man to go to Heaven". Our greed and selfish priorities as a nation have finally done us in. We had better turn back to God before God turns his back on us.
October 21, 2008 at 6:33 p.m. ( permalink | suggest removal )