AIG, a behemoth of the insurance and financial industry, has been taken over by the government. WaMu, the banking giant, is history and Wachovia is teetering. Wall Street superstars Bear Stearns, Lehman Bros. and Merrill Lynch have disappeared. Our financial markets are in utter turmoil and our economy is edging close the the abyss of a depression. Retirees like myself, who have invested their money in mutual funds, have seen their life savings depleted by a third. Other investors have seen the value of their portfolios tank with no end in sight. Who then is to blame for this financial crisis?
There has been a lot of angry finger pointing, much of it political posturing between Democrats and Republicans. Obama likes to say that eight years of failed policies by the Bush administration are to blame for the mess we're in and that his opponent supported those policies. That's pure hogwash. While the Bush administration with its aversion to government regulation may be partially responsible, there is plenty of blame to go around, with greed playing a major role.
Everyone seems to be piling on Wall Street. Yes, there is the greed of Wall Street with its get-rich-quick schemes, but there is also the greed of Main Street to keep-up-with-the-Joneses, no matter the cost. If my neighbor has a Buick, I've got to have a Cadillac. If he's got a boat, I've got to have a bigger boat. Main Street has been living on credit beyond the means to repay its debt and now the days of easy credit are over. And that brings me to the subprime mortgages which have made some people rich, caused others to lose their homes, and led to a disasterous decline in the housing market. Charles Krauthammer put it this way in a recent column:
"I have little doubt that some, if not many, cases of (Wall Street) malfeasance will emerge. But what we conveniently neglect is the fact that much of this crisis was brought upon us by the good intentions of good people. For decades, starting with Jimmy Carter's Community Reinvestment Act of 1977, there has been bipartisan agreement to use government power to expand homeownership to people who had been shut out for economic reasons or, sometimes, because of racial and ethnic discrimination. What could be a more worthy cause? But it led to tremendous pressure on Fannie Mae and Freddie Mac - who in turn pressured banks and other lenders - to extend mortgages to people who were borrowing over their heads. That's called subprime lending. It lies at the root of our current calamity."
And while we're speaking of greed, let's not forget our churches. In my formative years, churches were small and there were no radio preachers or televangelists. Churches were made tax exempt only because, without that exemption, they might have found it hard to survive. Billy Graham and others like him, while they did ask for donations, were concerned with saving souls, not with making money. All that changed with Jimmy Swaggert and those that followed.
Today's megachurches and televangelists are raking in billions of dollars in donations, many of which are invested in money making properties not related to any church activities. The greed of the churches exceeds that of Wall Street. While the good churchgoers on Main Street are piling up a mountain of debt, their churches are piling up a mountain of tax free money. There is no longer any justification for exempting wealthy churches from having to pay taxes.
Many of us on Main Street are infuriated with Wall Street and are opposed to the Treasury's bailout plan of spending $700 billion to buy up the mortgage-backed securities held by troubled financial institutions. But when we demand that the greedy Wall Street fat cats be punished, we ought to take a good look at ourselves. We're no different from those fat cats. We're just not wealthy. And if our anger prevents the passage of a sound bailout plan, we will all suffer for it. Credit will freeze up for everyone and then jobs will disappear. Our economy will collapse and we will all find oursleves in another great depression.
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