Thursday, October 9, 2008

As an economic downturn tumbles toward a new global depression, how shall we then live?

SURREAL IS REALITY. What a difference a year makes in our national financial outlook and global economic realities. I watched an investment company ad on TV last night. Its pitch and promises seemed incredibly surreal. All that a few months ago seemed rock-solid and reliable, as the ad projected, is now a slippery slope. The company that bought the ad-time on CNN is in jeopardy of bankruptcy for unsound practices that had become the industry standard.

HOUSE OF CARDS. There may have been warning signs of trouble ahead, like former Fed Chairman Alan Greenspan speaking of the markets’ “irrational exuberance” (interestingly, though Greenspan was in a position to reign in the freeloading financial markets, he did nothing but sanctify it). But flashing indicators of an impending crisis went unheeded and, ultimately, no-turning-back thresholds were crossed. Now Wall Street’s house of cards is falling in upon itself with an impact the reaches far and wide.

ONE MORE DIVERSION FROM AMERICA’S DREAM. Whether the $700 billion appropriated by Congress last week is seen as a Wall Street bailout or a financial markets rescue, the bottom line is that it, along with previous bailouts for AIG and others, is on the backs of taxpayers. This is one more disturbing diversion of resources from essential services, investment in education and research, elimination of poverty, economic stimulus, and international leadership in compassion and development. It is one more major hit on a spiraling federal budget deficit and debt. Look how far we’ve come in eight years. Who’d have thought we’d be pining for the Clinton days?

REAPING WHAT WAS SEWN? I can’t help but notice that $700 billion appropriated for the Wall Street bailout is roughly the amount of money spent in Iraq to this point in time. I find that very interesting. America’s leadership has wasted $700 billion in a misguided war it misled our Congressional representatives into supporting. Now, in its waning days, the Bush Administration asks for $700 billion to bailout a market sector whose rampant greed and irresponsibility it championed with every possible deregulation policy advantage. Are we all beginning to reap what a relative few chose to sew?

COMPLICITY IN FOOLISHNESS. Blame for the financial crisis and its impending economic fallout is flying in many directions. Of course “blame” and “responsibility” don't quite match up. It seems to me that we are all complicit in this. Still, a relatively small number of people exacerbated the situation with unchecked greed and unethical behavior. The crisis erupted primarily from two opposite directions that fed each other’s desires and which were without the bridle of reasonable regulation.

ANATOMY OF A COLLAPSE. The desire of the financial sector to make more money more easily and more quickly in “creative” ways morphed into bundling housing mortgages into stocks to be speculated upon. The need for getting higher dividends on this stock pressed lenders to make ever riskier loans to clearly unqualified home-buyers. People desiring to have a piece of the American dream (to own their own home or a bigger and better home) were more than ready to sign on the dotted line--even if they had to misrepresent their real income and assets and knew it was all a crap shoot. The rest of us knew most of this was going on, but only shook our heads in mild disbelief or benign approval.

DOMINOES FALLING. It didn’t take too long for folks who had purchased homes well beyond their means—and beyond the traditional boundaries and wisdom of banking and mortgage institutions—to fall behind in their often ballooning variable-rate mortgage payments. Foreclosures mounted and then mushroomed. Returns on investment for the sub-prime housing stocks held by greedy investors plummeted. Fear and panic set in. One institution after another had to admit the obvious. One domino began to fall against another. And the rest is history as it happens day by day.

HERE WE ARE. So, here we are. Stock markets are tumbling nationally and globally. “Downturn” talk has yield to “recession” talk, which has turned to “depression” talk. I wonder, if the problem had been named and faced even 12 months ago by prudent leadership, might we not be talking “depression?” But here we are. Are we ready for this? Not even. Right now, it seems to me, we are not ready even to fathom the potential changes to our lifestyles and impacts on our lives and the world that are on the horizon.

DIGGING IN OR DIGGING DEEP? Will Americans dig in--circle the wagons, withdraw, turn inward, try to protect "our stuff" over against others? Or will we dig deep to rediscover something deeper--more noble, more human, more compassionate, more restorative, more sane, more hopeful--within us? I agree with Barack Obama’s statement that this not a time for “irrational panic.” However, given the economic challenges on the horizon, we might begin to consider ways we can take what is best in our faith, in our sense of community, and in the American dream we share and begin to ready ourselves to move together into a changed future with sanity and conscience, realism and hope.

Print in orange was printed as a Letter to the Editor in the Indianapolis Star on October 14, 2008

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