Comments on Saving to Inve$t: My Rant on Obama & Wall Street Greed

Obama promised to uplift the world economy. I thin...

2009-08-17T21:15:03.230-04:00

Obama promised to uplift the world economy. I think he is on the right track. But I think he needs also to focus on the automotive industry. I think the state of Michigan is really experiencing much of the downside of the economic crisis..

You present an intriguing position on the root cau...

2009-02-22T15:18:00.000-05:00

You present an intriguing position on the root cause of this recession. But, I am personally unwilling to allow Wall Street, Banks, and Mortgage Brokerage industry off the hook just yet.

First, cheap capital, no matter the source, is not the root cause. It is an enabling factor. Yes if the capital had not been so cheap the boom in real estate would not have been possible.

Wall Street pressured banks and Mortgage brokers to write more and more loans. Underwriters were either complicit or incompetent. Regulators and politicians had their head in the sand.

The mortgage brokerage industry used to be a 1 trillion dollar industry. It is completely unregulated.

I personally do not think there is any one root cause. It is easy to blame the actions of over seas governments for our problems. But, the reality of it is that we decided how to use the capital. We decided to outside of our normal lending practices. We decided to ignore the little voice in our head that told us not to sign the mortgage. We decided to turn a blind eye to predatory practices. We decided to ignore the writing on the wall on how all this would pan out if the bubble burst.

The blame squarely leas with us not cheap capital. We decided how, when it should be used; and by whom.

Beau

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2008-10-23T14:08:00.000-04:00

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I don't think the financial crisis has much to do ...

2008-10-21T22:11:00.000-04:00

I don't think the financial crisis has much to do with Obama being ahead in the polls.

Obama is ahead because independents (the people who decide elections) fear a liberal leadership a little less than another four years of (recent) conservative leadership. Independents vote for the least possible damage. Bush has done almost irreparable damage in so many areas, and McCain/Palin promise more of the same, and maybe opening up another pointless war.

Bush, McCain, Palin are (finally) beginning to scare the hell out of independents. Independents are sick of throwing money away in Iraq, and couldn't care less about hollow topics like abortions and gays. In fact no one has the luxury to hate abortions or gays when they've lost their jobs. Suddenly, a voter's focus starts to sharpen on real issues. Scare tactics no longer work.

In time, the finance issue will be solved by appointed economists, not politicians. It's just a liquidity problem. But oh my God, I just think we might actually have to go a quarter or two without positive economic growth. The world will not end. Recession, Recession, Recession. There I said it. The Pits of Hell didn't open up.

Thanks for the comments. I tend to agree that Wall...

2008-10-21T16:55:00.000-04:00

Thanks for the comments. I tend to agree that Wall Street cannot be held solely accountable since the government and consumers create the framework and demand for the "greed culture" to persist. Still, Wall street was the conduit for the financial engineering that allowed leverage to bring down the financial system (and some say American capitalism) so abruptly.

From the author, here are some more commments to the responses:

It's an incredibly complex problem we're facing. Not enough politicians understand finance. Not enough financiers understand politics. So much is lost in translation. After the stock crash of 1929, markets climbed 50% before taking another 89% plunge. Misguided policy was the culprit, and you know what followed (extremist politics, Hitler, WWII, Hiroshima, etc). I'm so very struck by the parallels between our time and the early 1900s. More 1914 than 1929, actually. Then, like now, prosperity had been uplifted by a wave of innovation (steamship, telegraph, railroad, telephone, autos) that dramatically lowered transport and communication costs. The gold standard underpinned free markets. Immigration surged. Passports weren't needed. New nation-states emerged (Germany, Japan, Russia). Commodities (Africa, Latin America) were booming. Everyone thought prosperity and peace would grow in a straight line. No one thought it could end. There was too much for all to lose.

It sounds very familiar. You can hear globalization losing its popular appeal. Reactionary politics are on the rise (globally). Nationalist tensions are building. US hegemony is vulnerable. And I see the ledge again. Our politicians need to be very careful not to push us over.

All that said I think Obama has the potential to pull us back. If the times make the leader, he'll have his chance.

I never really thought of it that way, but it make...

2008-10-21T13:18:00.000-04:00

I never really thought of it that way, but it makes perfect sense. Reducing it to "Wall Street Greed" is a cop-out.

Blaming the Asian Financial crisis for this mess i...

2008-10-21T13:17:00.000-04:00

Blaming the Asian Financial crisis for this mess is a bit of a stretch. I think Obama has got the right approach to deal with the crisis. We need to ensure we deal with getting out the economic slump before tackling the other "big" issues.