Tuesday, September 30, 2008
Well; now that the bailout appears to have flamed out we see the stock market dropping faster than Larry Craig's boxers in airport men's room (what? hey, it's just an analogy!). In conversations over the weekend ( I was travelling to visit some friends) I was told by a number of people that the credit crunch was the fault of the consumer. There's no doubt in my mind that a lot of folks, who really did know better than to believe that the loan and real estate markets were sound, borrowed much more money than they could hope to repay if anything interrupted their income stream or devalued their equity stake in their property. There were also, of course, many thousands of businesses, both large and small, that went on spending sprees for new equipment, expansion and acquisitons and are now scrambling in a tightening market to service the debt they generated. However, the major culprits in this situation are the current administration, the financial behemoths that control retail lending and the superbly trained, groomed and accoutred thieves who ran them. I've been through a bankruptcy. It destroyed my credit for 8 years. As a result of proving that I wasn't very good at controlling my spending I was penalized by being refused any credit at less than confiscatory rates (at least I used to think 24% interest was confiscatory--now that seems like a bargain compared to some of the rates I see). I learned a lesson. I don't owe anyone any money at the moment and I hope to keep it that way. I also don't have any money to speak of, when I finish what I'm doing at the house I will be flat broke, most likely. I know that I can't spend money I don't have and expect someone to bail ME out--with no strings attached. I don't think consumers who borrowed money to purchase McMansions (knowing they couldn't really afford them) should be afforded the same degree of relief as people who were lied to and convinced by the bunco artist lenders that their ARM's were "no problem" and they would just be able to re-fi them at any time. Once the "customers" have had their 'taste' of ashes and sackcloth I think it would be both just and proper that we deal with their enablers. I have heard that some bigshot execs have lost their jobs, that they share our pain. Horseshit. The majority of the corporate thugs who were the architects of this house of cards have made piles of money, much of which has been "re purposed" into various stock portfolios, real estate and other assets. I would suggest (fat lot of good it will do) that we set aside some funds and set up a an investigative body to comb through the financial records of the failed institutions and their officers. Where those investigations reveal mis or malfeasance, appropriate penalties--including prison sentences and restitution--should be levied. Mr. Paulson said, last week, that we needed to offer the people that allowed or caused this current fiasco, some incentives to get them to sign on. I think a couple of hundred U.S. Marshalls and T-men with warrants, green eyeshades and calculators would work wonders.