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6 March 2009

(Bubbles by Matt)

One of the great joys of my childhood was dipping that little ring wand into the bottle of soapy liquid, then pulling it out and waving beautiful rainbow-tinted bubbles into the wind of my Oklahoma home. They magically floated upward into the blue sky before popping and raining the whole sticky mess back down onto the ground or onto me, if I was directly under them. Those of you who are young enough to be my children or even grandchildren, I’m sad to admit, were treated to a even bigger version of this childhood toy which allowed you to launch gigantic bubbles into the air. What fun that must have been. But what a huge mess those gigantic bubbles must have made when they inevitably popped and showered their way back down. Yuck! Almost as much fun as creating these gossamer visions of fancy was watching others do so. But it was always frustrating when a bratty cousin or sibling refused to share the wand, hogging the best part of the fun for himself, which is where I’m going today.

For a long time now the vast majority of the American people have been on the sidelines watching a couple of those gigantic bubbles rising skyward while being assured by the wand waver that they were magical and would not break. Let’s take a look at the wand wavers so that we can give them full credit for what’s going on today.

blowing-bubblesFirst we have the real estate bubble. Now, there has been a great deal of effort lately to blame this bubble on those evil folks who bought homes they couldn’t afford with mortgages that they couldn’t possibly pay back. The Republicans and Wall Street analysts are attempting to do what they always do, direct the blame in a downward direction. They know that the little guy has little voice and even less power to defend himself from their attacks. But let’s get real.

Power dwells at the top of everything everywhere. “Little guys” didn’t just jump out there and demand unreasonable mortgages in order to buy the McMansions that they were buying in suburban America. They were pushed by two very powerful groups who did everything they could to talk those “little guys” into throwing caution to the wind and jumping into the deep end of the real estate market with both feet while concealing as best they could that the “little guys” were being fitted with cement overshoes.

Real estate agents and brokers had the oldest motivation in the world to push people into higher and higher priced homes: profit. If your income is being determined on a percentage basis of the commodity you sell, what’s better for you than a higher price on the item? NOTHING!

I know to some of my readers I must seem like some sort of flaky Jack of all trades because of the myriad experiences I have had, but it is true nonetheless. When my teaching job was disappearing, I decided that I would go to real estate school and become an agent. I liked houses, and I had done very well over the years with my home-purchasing experiences. So it seemed like a good fit.

But what I learned in school and on the job was not what I expected. I was taught by every successful mentor that I was forced by the State of Texas to learn from that the best way to make money in a tough business was to push! Push the buyer through the entire process. Even if you took the buyer around to show properties, you were reminded that you always really work for the seller.  So your job is to get the highest possible price for the property from the buyer. And, of course, it was always pointed out that your commission – all you received on the deal – was determined by the price you got. The higher the price for the property, the more you would make. We were schooled on how to “perform market analyses” in order to determine that price. But let’s face it, the prices of real estate in America have been skyrocketing for quite some time. How convenient.

Then there’s that other part of the deadly duo that helps to set the prices: the mortgage brokers. Unsurprisingly, for them, too, the higher the home price/mortgage, the more they made. So they also are putting upward pressure on the market. Any conservative or Republican will just call this free enterprise, and I agree that they have a point.

But, let’s face it, these educated “professionals” were far more aware of what they were doing than the unsuspecting, most likely uneducated buyers they were smoothing the way for into fiscally dangerous mortgages. Who doesn’t want their dream home? But in the 1990s and 2000s, people were being pushed into McMansions with “easy” credit terms and qualification. Only when their own “balloon loans” came to term did many of these naïve buyers realize that their mortgage payment was higher than they expected and could afford.

To make matters worse, the news media, both cable and network, kept touting the “boom in real estate,” bringing more and more people into that feel-good market. President Bush promoted home ownership as part of his agenda, also fueling the fire to “go out and buy that dream home.” Day after day the steady drumbeat of “There’s no time like the present” kept thumping in the ears of the American people. The gigantic bubble just kept on climbing into the stratosphere with no talk of a possible big bang ahead. Well, there were a few voices of concern, but they were quickly drowned out by the chattering heads in the Bush White House and the news media.

As for my career in real estate, it was one month long. I’m sorry to say that I found myself incapable of pushing the innocents into an over-valued home in a market that common sense told me was going to crash and destroy them. Of course, I could have ridden the bubble and made some money if my conscience hadn’t gotten in the way, because the crash I foresaw was still four years ahead, and I felt much like a voice in the wilderness on the issue. Everybody was so busy enjoying the beautiful bubble as it rose up, up, up, that they just couldn’t face the sad fact that eventually it had to burst.

bubbles-01Now that brings us to the Wall Street mess. And a mess it is. Jon Stewart, of The Daily Show ran an interesting set of clips yesterday. It showed how the chattering professionals over at CNBC are probably not the voices that should be listened to on the Wall Street problem. Clip after clip showed CNBC analysts proclaiming that the bottom had been reached in the Wall Street meltdown as far back as early last year.

And in spite of being wrong about that, they just kept on encouraging people to buy, buy, buy all through last year, proclaiming that the worst was over. Of course, we all know that their advice was ill advised at best and criminally negligent at worst. Despite their joining with the Bush White House in all that “happy talk,” the crash of Wall Street continues. But now it’s all President Obama’s fault.

Now, I’ll be the first to admit that I would like to see my president rush out and stop the bleeding, but Wall Street is not the only bloody wound on the corpse of America. There is also the matter of unemployment, not to mention the healthcare crisis. Figures were released that indicated unemployment has risen to the highest level since August 1949, according to Erin Burnett today on Morning Joe. But does Wall Street concern itself with the fact that almost 1,000 people a day lost their jobs in the month of February? NO! They never seem to worry about joblessness.

I have been watching a strange phenomenon in the DOW. It seems that every time one of these reports is issued indicating a further rise in unemployment, the DOW goes up! What is that about? Could it be that the rich guys over on Wall Street see this as much needed downsizing that helps corporate America? Never mind the real people whose lives have just been decimated. Isn’t the loss of 1,000 jobs a day throwing 1,000 homes nearer to foreclosure? Isn’t it diluting the purchasing power of 2.3 million family members at retail establishments across the width and breadth of America?

While the kings of Wall Street grab all the attention to their sorry, but self-inflicted plight, they turn a cold shoulder to real people with real problems. They, too, pushed the value of their commodities to a ridiculously over-inflated level to bump up their own commissions. So where is their sense of personal responsibility in all of this? There is none! They are too busy making sure they get the same bonus for performing badly that they got for bringing unrealistic profit margins to their companies during the “good times.”

The rich bankers of Wall Street aren’t willing to share in the hardships they have pushed in a downward direction onto the American people. Instead they cry out for more money to fix their mess. They threaten that to do nothing will only bring greater disaster onto the American, as well as the World, economy. These greedy maniacs have dug a bottomless black hole and demanded that the unemployed, uninsured workers of America put their long neglected needs aside and bail them out repeatedly!  Whatever are we to do? I don’t know.

President Obama and the Democrats in Congress are trying to fix the problem in a pro-active sort of way. They are being greeted by stonewalled Republican resistance at every turn. Now, this wouldn’t be totally unwelcome in the face of the frustration felt by most of us at this insane situation, but the Republicans offer nothing, nada, zip, zilch! They just stand on their alleged principles and shout, “NO!”  Hey, Republicans, obstruction is not a solution!  Shouting “Socialism” in this situation is akin to shouting “fire” in a crowded theater. It is more damaging than helpful.

I am never distracted from the truth that it was the dogma of conservative Republicans that a hands-off, free-market economy was the ticket to economic success for everyone. Well, I think that amounts to no more than a plastic wand designed to blow pretty bubbles into the air. Now that the bubbles have broken and the sticky liquid is falling back down onto all of us, the last thing we need is a new bubble-making wand.

So if the Republicans have nothing positive to offer as to how to keep the sticky stuff off of us, they need to sit down, shut up, and think about what they have done. PLEASE, will an adult step forward and take the bubble wand from their hands and send them to their room for a time out? Oh, that’s right. The American voters did just that back in November. What a naughty bunch of children they are. They stand in the hallway sticking their tongues out at the American people, refusing to go to their rooms. It may be time for a spanking.


3 Comments leave one →
  1. morelightthanheat permalink
    7 March 2009 9:14 pm

    Jack, if only it were ONLY 1,000 jobs a day. Actually, during February, it was a bit over 20,000 jobs that vanished each and every day, and 20,000 homes closer to foreclosure. And if you count working days only, it was 30,000 a day! For the lucky ones among those newly unemployed, the job loss represented only one of the wage earners in the family.

    And all of that ignores the redefining of “unemployed” that has occurred over the past several decades. That redefining eliminates all those who have given up looking or who have accepted part time work because they cannot find a full-time job or who are trying to start their own businesses. It also eliminates those who are independent contractors — that clever classification that pushes the full payroll tax burden onto the employee rather than it being shared with the employer. Independent contractor status was intended for people who performed a specific, short-term task for one employer, then moved on to another. But employers have seen it as a sweet way to avoid a major expense associated with full-time employees.

    Keep up the good fight.

    • 9 March 2009 10:28 am

      To, Morelightthanheat:

      Thanks for correcting my poor math skills. I realized this the day after I posted, but failed to follow up with the correction. The person on MSNBC who reported on these unemployment figures actually said that the number of those who lost their jobs was close to 1,00 per hour. That’s a BIG difference.

      \As a freelance court reporter for 14 years, I am well aware of the “independent contractors” provision in the tax code. When the IRS attempted to close the loophole for court reporting firms such a howl of anger went up from the firm owners that somehow they escaped its repeal during that period. I have been out of the industry for a while and don’t know where it stands these days. What it really seemed to accomplish was a mass stampede into the Republican camp by the industry.

      One of the greatest threats to our society, in my view, is the mindless anti-tax sentiment fueled by the conservative right. Nobody seems to what to pay for anything anymore. There is not only no sense of bi-partisanship coming from the right ; there is also no sense of the American concept of helping your neighbor in a crisis. Greed still rules the right, and until that is at least lessened, we will continue in this highly charged partisan period of our nation’s political discussion.

      Thanks, again, for the mathematical correction.

  2. morelightthanheat permalink
    9 March 2009 4:49 pm

    I think that perhaps the most worrisome aspect to the last 30 years is the social Darwinism that has taken hold. And, ironically, it’s espoused by those who don’t believe in evolution, the foundation of which is natural selection, commonly known as survival of the fittest.

    The anti-tax mentality may look good on first blush, but like so many conservative ideas, it is simplistic and doesn’t stand up to detailed examination. And because such examination doesn’t lend itself to 15 second sound bites, that examination rarely happens — at least in public. But because nobody enjoys taxes, it gains public favor.

    You mention the idea of helping a neighbor in a crisis. Or, I’d like to add, a neighbor in need — before it becomes a crisis. Unfortunately, Ayn Rand’s ideas have permeated the American ethos. The idea that we are so consistently altruistic as to support charities to pick up the slack while we celebrate greed and personal acquisition is simply absurd.

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