The Housing Boom Boomerang

Thomas L. Friedman at the NY Times describes the current state of the financial crisis and what it reveals about the US. Excerpts below.

Link: Op-Ed Columnist – The Great Unraveling – NYTimes.com.

I have no sympathy for Madoff. But the fact is, his alleged Ponzi scheme was only slightly more outrageous than the “legal” scheme that Wall Street was running, fueled by cheap credit, low standards and high greed. What do you call giving a worker who makes only $14,000 a year a nothing-down and nothing-to-pay-for-two-years mortgage to buy a $750,000 home, and then bundling that mortgage with 100 others into bonds — which Moody’s or Standard & Poors rate AAA — and then selling them to banks and pension funds the world over? That is what our financial industry was doing. If that isn’t a pyramid scheme, what is?

Far from being built on best practices, this legal Ponzi scheme was built on the mortgage brokers, bond bundlers, rating agencies, bond sellers and homeowners all working on the I.B.G. principle: “I’ll be gone” when the payments come due or the mortgage has to be renegotiated.

The Madoff affair is the cherry on top of a national breakdown in financial propriety, regulations and common sense. Which is why we don’t just need a financial bailout; we need an ethical bailout. We need to re-establish the core balance between our markets, ethics and regulations. I don’t want to kill the animal spirits that necessarily drive capitalism — but I don’t want to be eaten by them either.

Larry Winget Rants about America

It's time for straight talk. Here's Larry Winget's opinion.

Larry Winget — Money – Personal Development – Business |.

I am sick of listening to the politicians blow smoke up my skirt saying that Americans are the hardest working people on the planet.  They are simply pandering to our emotions and our sense of patriotism about what great people we are.  That’s a load of crap.  American workers are NOT the hardest working people on the planet.  Read a little.  Watch some educational television.   Travel some.  You will quickly find out that the American worker is about the laziest worker on the planet.  For the most part, workers do just enough to squeeze by.  Tell them that you have a problem with how little effort they put out and the crappy job they are doing and they will contact their union rep and file a grievance.  Yep, I am taking on labor unions too.  Originally, they were a great idea.  They were formed to protect the American worker from abuse.  But folks, this ain’t a hundred years ago.   Working conditions are not what they used to be.  Your rights aren’t being violated by expecting you to actually do what you were hired to do and are being paid to do.  Now labor unions exist not to make sure that workers are treated fairly and to stop abuse but to put the squeeze on companies for every dollar they can to the point that the company can no longer be profitable or compete globally.  Want to know why we ship so many jobs overseas?  One of the reasons is labor unions.  Highly skilled people, who are willing to work harder than people in our country are willing to work (and for less money, I know) and don’t belong to a union that has management by the short hairs. (Of course the situation is more complex than that but this is a rant, not a thesis.)  In few cases does America produce the highest quality product  and almost never is it done at the lowest price.

Am I anti-American?  Some of you will read this and think so.  Nothing could be more wrong.  I am very PRO-American.  But I’m not so wild about what we have let happen to our great country.  GREED.  A lack of INTEGRITY.  LIES.  IMMORALITY.  Not the kind of immorality that the fundamentalists talk about.  I’m talking about the morality that is based in doing the RIGHT thing.  The thing that has nothing to do with religion or politics.  Instead, it’s the thing you know in your heart is right because it just IS.  You don’t have to ask, you don’t have to think about who will win and who will lose, you don’t have to wonder about the repercussions or consequences, you just KNOW it’s the right thing.  And because you know it is the right thing, you do it.  That is real morality.

Selfishness, Greed, Self Restraint, and Empathy

Here’s a quote that may help us understand why many of us are driven to excess, especially when fear is involved.

Selfish behaviors are reward driven and innate, wired deeply into the survival mechanisms of the primitive brain, and when consistently reinforced, they will run away to greed, with its associated craving for money, food, or power. On the other hand, the self restraint and the empathy for others that are so important in fostering physical and mental health are learned behaviors – largely functions of the new human cortex and thus culturally dependent. These social behaviors are fragile and learned by imitations much as we learn language.

Dr. Peter Whybrow – "American Mania"

via The Oil Drum | I am Human, I’m American, and I’m an Addict….