Sometimes over the last four presidential terms it has seemed that presidents and other politicians get away with their lies. They may. But their country doesn't.
MSNBC's Chuck Todd astutely pointed out that one of the reasons the bailout package just failed is that it was sold by the president and by Congress, neither of whom Americans trust.
Just about every member of Congress in a tight race voted no because they thought they'd be beat up by their constituents, who hate the bill.
Why do they hate the bill? Because they hate the people who are telling them, probably honestly for once, that it's necessary.
"This is a crisis in leadership," Todd pointed out, "and the American public just doesn't trust anybody right now."
When you have a country where nobody trusts anybody, do you have a country at all?
Maybe what you now have, is a country of both citizens, and, forced by the constituents who vote them into their seats, politicians, who are now recognizing that if you make bad financial choices in the *real* world, you don’t get a magic pot of money to make it “all better”.
Republicans are the ones who didn’t support their President on this package despite all the yelling about Pelosi and her supposed influence (as IF Nancy Pelosi’s opinion is ever likely to influence the Republicans in the House!), and they’re all saying its because their constituents are telling them in no uncertain terms they don’t want the “financial fat cats on Wall Street” (CNN.com) bailed out.
Somebody has to pay for this bailout, and, as usual, it won’t be the people who caused it, instead it will be the factory worker who already can’t pay his mortgage because his job went to China, and the single Mom who has to choose between feeding her kids and paying for their medicine each month on her minimum wage job. I can understand why these folks don’t give a rat’s ass if the “markets” fail, and they certainly don’t want to pay for bailing out Wall Street since they aren’t likely to benefit in any way whatsoever from such a bailout.
The only thing that surprises me about the American public’s clear instruction to their representatives on how they feel about this bailout, is how long it’s taken them to stand up to Bush and his cronies, and say: “ENOUGH”in large enough numbers to force the issue.
You make your choices, you should have to live with the consequences of them.
I am wondering if “wolf” was cried once too often, which is yet another reason people are saying “Enough” (per Kristen), when now might be the time we need the help.
David Murray says
This is one issue I am a helpless baby about. Scout has as good an idea of whether or not this bailout is a good idea or a shitty one.
And Kristen, it appears, has a MUCH better idea than I do.
David, I wouldn’t presume to cast myself as any sort of financial expert – frankly, it’s just the opposite.
However, the one thing about finances that seems elementary to me is this:
The money coming in MUST be equal to, or more than the money going out in order for there to be fiscal responsibility.
Somehow, somewhere along the line we’ve been sold a bill of goods that suggests this doesn’t have to be the case for either governments or stock exchanges. Frankly, this current crisis appears to be a clear repudiation of that contention to me.
Nevertheless, I have no doubt that SOME sort of bailout plan will be approved eventually. I’m just sorry that all my honest, honourable, tax-paying American friends are going to be the people who end up on the hook paying for it!
Maybe trust, or misplaced trust, is at the heart of this whole issue. After all, it began with the mortgage meltdown, which was deeply rooted in the fact that too many Americans were prepared to trust the lenders who assure them they could suddenly afford a mortgage they’d never been able to afford before.
At the individual family level, people were misled (often all too willingly so) into believing that Kristen’s truth about how the money coming in must equal the money going out no longer applied. Of course it always applies, as too many of those same people are now discovering – as have the financial institutions who backed those shaky lending practices, and as Washington is being reminded now.
It seems everybody – from individuals to banks to government – was willing to trust that somebody knew what they were talking about and that everything could be just fine. And now the pendulum has swung and nobody trust anybody to fix it.
Does it mean you don’t have a country at all when nobody trusts anyone? No. It just means leaders have to lead right now, and if they think they have the solution then they need to make it happen and stop worrying so much about votes in November. Somebody, anybody, start leading already!
David Murray says
You make some good points here, Reuben. And I agree that leaders do have to lead, and don’t have time to get Americans on board.
But try to imagine the society where a bank offers you a loan and you kindly thank them and tell them you’ll get back to them after doing some research first to make sure they can really afford to give you the loan.
We live busy lives in a complex world. We need to be able to trust in SOMETHING, and I don’t blame people for trusting banks.
Absolutely, you should be able to trust your bank and arguably banks betrayed that trust a little. But I’m thinking as the consumer I’m still responsible for reading the fine print and understanding the longer-term impacts.
And it’s not like the banks were wanting to lose money either – they were prepared to trust that all would be well.
Hindsight is easy, but it almost seems like nobody ever asked “what if all isn’t well? What if something slips a little?”
I agree with Reuben that as consumers we are responsible to read and understand our obligations when we sign contracts or agreements of any kind.
However, I disagree that the banks somehow don’t or didn’t realize that a number of the people they were approving mortgages or other loans for probably were a risk at best, and simply should have been declined at worst.
I have shaken my head at these advertisements I’ve seen nearly everywhere over the past few years that shout: “Bad credit? No credit? We can still get you a loan!” because if you are a bank or a financial institution of any stripe you are SUPPOSED to be able to evaluate potential loan candidates based on whether they have the wherewithal to repay the loan.
A bank of all organizations ought to know better than to use “we hope all will be well” as a rationale for whether or not to loan someone money, or for that matter as a way to make ANY type of business decision. This was a greedy calculated risk that failed, but I still don’t think the American public should be on the hook for bad decisions by the banking industry.
Another part of the problem, based on what I have been reading, is that a large number of the regulations and safeguards which used to be in place in the US financial system to protect against precisely the risky financial behaviours that have allowed this crisis to happen have been relaxed or removed entirely in the past 8-10 years.
While the financial institutions who took advantage of this foolish relaxation of safeguards should have to live with their bad choices, the government agencies and Congress should also accept a share of the responsibility here, as they allowed these things to pass.
The current crisis needs to be fixed, yes, but Congress and the President are doing their usual fear-mongering, panic mode messaging approach, which is designed (similar to how they sold the invasion of Iraq) to frighten everyone so intensely that they just blindly agree to anything “the experts” say will fix it and then forget to demand explanations, accountability and a commitment to make changes in future to make sure it doesn’t happen again.
David Murray says
Reuben, lots of the people who took these loans are financial illiterates (this coming from the perspective of a financial semi-literate who, when he hears “escrow,” always thinks of “scare crow” and thus can’t ever remember what it means).
But because I’m one of the “cultural elite” that the right wing loves to hate, I know this, by osmosis (and NPR):
The people banks targeted with these loans had financial knowledge amounting to no more than “first month and last month’s rent.” How do you expect them to quibble about interest rates and demand to know why the bank wasn’t requiring proof of their income?
The banks DIDN’T expect any questions from these people. The banks DID bundle up these crap-assed mortgages with good mortgages, and sell them to other institutions, who resold them to others, everybody getting commissions along the way and everybody hoping–ironically, just like the poor saps with the mortgages to–that the whole shithouse wouldn’t go up in flames.
The difference between the commission-takers and the failing mortgage-payment makers is that the former knew they were taking advantage of the latter, and the latter didn’t even know the former existed.
People are always going to want to own something, and they’re always going to be overly optimistic about their ability to pay for it. There’s no regulating that. What we CAN do is return to regulatory loan standards that recognize Kristen’s Law of Economics: What comes in must go out.
And let me confirm: I have now exhausted my fund of knowledge and opinions about this matter. In fact, I may be running a deficit.
Eileen Burmeister says
This is crisis is the very reason I declared English as my major in 1986. It makes my brain hurt just to try and understand it.
Amen to that, Eileen. And to be clear, I do think the banks knew what they were doing. They knew it was risky and they just were willing to take the chance that it wouldn’t all collapse.
Maybe it’s odd that a bunch of communications people are even trying to understand this whole thing. But then maybe that’s a reflection of the whole problem – the majority of “average citizens” didn’t and still don’t fully understand. I certainly include myself in that.
But I do know enough to be really annoyed when I see the ads run by one of our banks here in Canada whose slogan is “You’re richer than you think.” No I’m not! I’m acutely aware of how not rich I am, and I wish they’d stop trying to convince me otherwise!
Amen to YOU, Reuben! I’m right there with you. I had to ARGUE with the woman at the bank when I opened a savings account earlier this year and she tried to get me to take a line of credit too “for unexpected expenses”. I told her my philosophy was very simple – If I can’t pay for it NOW with CASH, then I can’t afford it – period. I mean geez, why did she think I was opening a “savings” account?!
She didn’t get it and pre-approved me anyway. Whatever! They won’t be getting any interest payments out of me.