Reprise: Coming To Our Senses (9/23/2008)

I am looking back over some of my old posts from the fall of 2008, when the economy crashed.  I'm happy with my analysis back then, which I think still holds up pretty well, given all that has come to light in the meantime.  Here's one from September 23, 2008, just as the stock market was tanking.

Who is responsible for this financial mess we are in?

Is it the poor sap who took a mortgage for a house which he really couldn't afford, even though the mortage lender didn't bother to check his income? Is it the mortgage lenders who lent money to any Tom, Dick, or Harry, just so they could take the fees and then happily sell off the mortgage itself to someone else?

Is it the Wall Street moneymen, like Henry Paulson and his pals, along with their financial whiz-kids, who made their millions and even billions coming up with all kinds of instruments of debt that now threaten to drown us all? Is it the Ayn Randist Alan Greenspan, who dominated the financial throne at the Federal Reserve for 19 years and refused to regulate the banks and made credit so easy to get, that debt at all levels ballooned and we had how many bubbles now?

Is it a Congress (mostly Republican since 1994) that was uninterested in provided oversight or regulation, because of ideology or self-interest or both? Is it the three Presidents--Bush, Clinton, and Bush--who appointed and reappointed Greenspan and other deregulators to high office, not thinking about the highwire act of defying economic gravity that they were undertaking?

Is it you and me, who were very happy to take our high returns from our stockmarket portfolios and to take out house equity loans to spend on all kinds of things, without wondering if it was a little too good to be true?

I guess the blame has to be shared by all of us (not that we've all gained equally from it). And now comes the price to be paid, the 'punishment for sins committed', for mistakes made. Or do we think that we can continue our undisciplined, irrational ways and that there will be no consequences, that we can get something for nothing, that we can simply fix everything within a couple of days by throwing at the problem tons of money we'll have to borrow from someone else?

I see a lot of flailing around at the highest levels, looking for a happy ending, a door from which to escape the looming judgment, a way to wakeup from this nightmare. You know the stages of grief? We're still in the stage of shock and denial. It is not a pleasant sight but perhaps to be expected.

So when are we going to come to our senses? When are we going to start living within our means? When are we going to start obeying the fundamental laws of economic life?