Thursday, 8 October 2009

My Favorite Year

Yesterday, Melissa Block NPR interviewed a guy named Adam Davidson about government intervention in the housing markets. Click here to listen to it. There are a bunch of things in this conversation that I freak out about. The easiest to identify happens at about 1:20 in the playback, where Ms. Block opines that listeners will remember that the global financial crisis began as a housing crisis when housing prices dropped. This is too much to take. The global economic crisis didn't start when housing prices dropped. Readers of The Black Swan will understand my hesitation in creating a narrative of causation around the global economic crisis, but since chaos theory makes for a shitty storyline, let's just go ahead and say that the ingredients of the global economic crisis likely include but are not necessarily limited to a lack of consideration of the consequences of way too easy credit, a willingness or eagerness of American consumers to live beyond their means, a willingness or eagerness of global suppliers to rely on those Americans living beyond their means to be their engine of growth, a pervasive and completely inexcusable belief that home prices would not/could not ever drop, and the US government's inspiring willingness to create incentives for and subsidize reckless taxpayer behavior. I am going to lead a drive to remove the word "taxpayer" from the American lexicon and replace it with "constituent" or, more simply, "vote." Since we appear only to ever want to elect those people who will mollycoddle, entitle and spoil us nearly literally to death, the defining aspect of our relationship to our government has ceased being our financial contributions to it, and started being our entitled expectations from it.

Saying that the global financial crisis was caused by a drop in housing prices is a lot like saying that the death of someone after taking a stray bullet in the head while walking through a dangerous part of town was caused by that person's non-bulletproof head. Not a bullet, not the person who fired the bullet, not the environment that allowed and encouraged the shooter to have the gun, not the set of social circumstances and lack of personal responsibility and regard which create dangerous neighborhoods - no, the victim's non-bulletproof head was to blame.

I usually find NPR to be pretty tolerable even if my mother in law thinks that makes me a lefty. This kind of shit I can't stand and can't excuse.

My interest in health care reform has all of a sudden become much more pronounced, yet my sense of utter hopelessness of the situation is ever more profound. Follow the money, it's all around. There are very good reasons for things being like they are. Let me rephrase that - there are very understandable reasons for things being like they are. If you are an insurance company and covering someone through his employer, all you have to do is get through an average of seven years with that person not having a major costly event and you win. That person will go on to other coverage and be a problem for one of your competitors. You don't pay money to keep that person healthy so that he can go and save your competitor a bunch of money in a few years. Why do people find this kind of behavior inexcusable? It's what you would do if you were an insurance company. There's no malice in it. Sure the whole denying coverage and skeevy evilness is inexcusable, but the basic construct operates exactly as it is built and compensated to operate. Whether a bunch of lackeys we pay to pander to our lack of collective will has the wherewithal to change the circumstances on our behalf, I don't know. No. I do know. They don't. But again, their interests are to stay in office for as long as possible and they'll do what needs to be done to accomplish that.

The glass is half full. The glass is half full. The glass is half full. The glass is half full. The glass...


GamJams said...

Yeah. And also, who do you like for Lombardia?

SD said...

I think Block was oversimplifying for the sake of the narrative. It was(is) all a house of cards, and it is broadly thought that the housing crisis was the breeze that kncked everything down.

I'd go further. I think everyone was sailing along, buying huge houses, commuting 40 miles each way in a 0% down Tahoe on $2 gas. Summer 2008 gas prices shot up and everyone was scrambling to get rid of the expensive to heat house, and their expensive to drive SUV and all of a sudden people are upside down in what they thought were assets. All the momentum reversed, and more cracks in the system showed up, then widened.

Chuck Wagon said...

SD - you hit the true monster in the closet: what happens when 30 yr fixed loans cost 8 or 9%?

Mike - the same guy I like for every other race on the calendar - Gilbert of course.

PlainJane said...

The drop in housing prices was simply the first undeniably painful symptom of the problem - the problem that you're hearing on NPR is that the media needs to simplify because the general public can't quite grasp (or don't want to grasp) their own contribution to the "crisis".

In my opinion, the theory that everyone has a right to own homes and new vehicles is a faulty one - by making credit so easy, thereby subsidizing pricing (to please constituents/taxpayers/votes), our politicians helped the general public contribute to the crisis - at the risk of simplifying, there was no way we could continue to over-extend our already over-extended lifestyles.

Of course, Melissa Block couldn't get all of that out (and more) in an acceptable news byte.

Thanks for the intellectual stimulation this Friday afternoon !