… Since the risk of a Wall Street meltdown is still very real, and since nobody has come up with a better idea, the bailout should go forward. It will probably save the homes and livelihoods of millions of Americans. But it will do so by absolving some of our wealthiest citizens of the consequences of their shortsightedness, dishonesty and greed.
Everyone knew we were in a housing bubble. Across the country, real estate prices were rising so fast that anyone thinking about buying a home had one logical course of action: Do it now. Anyone who already owned a home, especially in one of the red-hot markets, was building equity – or what looked like equity – so rapidly that there seemed no harm in pulling money out, even to pay for luxuries, since the property was going to keep appreciating. The nation was awash in cheap money, and everyone who owned a house was going to be rich.
As long as housing prices continued to rise, all was well. Any individual homeowner who ran into trouble with an adjustable-rate or interest-only mortgage could be refinanced back to financial health. But bubbles inevitably burst, and here’s where the mendacity and greed come in.
Wall Street, in its collective wisdom, knew that housing prices couldn’t rise indefinitely at such an unprecedented rate. Yet Wall Street created a gargantuan market in securities and insurance, worth many trillions of dollars, based on the premise that the impossible – a housing bubble that expands forever and lasts forever – had become inevitable.
The traders who invented, sold and resold these mortgage-backed instruments, making profits and commissions with every transaction, knew what legendary swindler Charles Ponzi knew: that those who got into and out of the market while housing prices were still rising would make a lot of money, and that when prices fell someone would be left holding the bag…
Wall Street is just a place where things happen. Pennsylvania Avenue is the place where the people’s interests are decided. Wall Street is where we send our personal financial warriors to battle for as big a piece of the pie as we can get. Wall Street represents our instincts, our greed, our narcissism. Pennsylvania Avenue is the place where we send people to be our parents – to keep us safe as we pursue our freedoms. The Reagan Dynasty has tricked us repeatedly by representing the interests of a specific segment of our society – the wealthy. They’ve gotten themselves elected by throwing out presents – tax cuts, promises to represent specific religious interests, capitalizing on patriotism. But they’ve ignored our need for safety, all the while preaching against their own version of danger – Gays, minorities, foreigners, Liberals, Arabs, tree-huggers, etc. But they’ve ignored the biggest danger of all – ourselves.
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