Friday, October 24, 2008

Remember the B-52's: "Who's To Blame?"

Who Is To Blame For The Financial Crisis We Find Ourselves In?

I am dating myself with the reference to the B-52's (great band from the '70's or '80's if you never heard of them), but the lyric is just to appropriate. I had written about finding scapegoats a few days ago, and this is just more of the same. I agree it is important to know where you have been in order to avoid going there again, but the only goal now should be to improve things going forward.

I know the argument that going back is critical to making sure some of these things don't happen again, but we all know how government works, and in my opinion this is not the purpose of these hearings.

In a continuing effort to find the absolute culprit for the financial mess that we Americans and those around the world find ourselves in, the parade to Capital Hill continued today. This serves two purposes.

The first is to allow the members of the House on the panel to ask questions in order to make themselves look tough on the issues, when way back when they may have been complicit in the current problem. Hindsight is always 20/20. Let's not get caught up in the details.

The second is to allow those brought in front of them, including former Chairman Greenspan, the current FDIC Chairwoman Sheila Blair, SEC Chairman Christopher Cox and Neel Kashkari who is in charge of the disposition of the $750 billion bailout fund, to defend both past, present and potential future actions. Not exactly must see TV.

Merely A Sideshow

This sideshow takes place in the shadow of a potential or actual worldwide recession in conjunction with a vast destruction of wealth in the form of declining home prices and a continued decline in the stock markets. The economic news simply gets worse and worse.

The stock market, after a 500+ decline in the Dow yesterday and a short lived bounce this morning is declining once again. Commodity prices are getting crushed amid the perception that economic growth, which prior to the Olympics had no chance of ending, seems to be gone.

Foreclosure Idea

I certainly don't want to leave the impression that nothing good ever comes out of these Congressional circuses. A proposal was discussed by Sheila Blair regarding foreclosures, but if it is ever implemented is another story:

From AOL Money & Finance:

"Sheila Blair, chairman of the Federal Deposit Insurance Corp., told the same Senate panel that the government needs to do more to help tens of thousands of home borrowers avert foreclosure, including setting standards for modifying mortgages into more affordable loans and providing loan guarantees to banks and other mortgage services that meet them."

"Loan guarantees could be used as an incentive for servicers to modify loans," Blair said. "By doing so, unaffordable loans could be converted into loans that are sustainable over the long term."

1 comment :

  1. I agree with you that we should at the very least be attempting to find a solution to the problem. Finding a scapegoat will not get that done though. We have spent too much time wasting time trying to find information out that is irrelevant to fixing the problem. We do not need to understand the problem to fix it. If we do not hurry to fix the problem we are in; it is only going to get worse.

    Michael Laitman mentions that we have to fix the true problem, man’s egoism, before the complete crisis will go away. Michael Laitman also mentions the solution to this problem and it is found on his blog. He relates specifically to the financial crisis at www.laitman.com/2008/10/what-cause-the-current-financial-crisis/ .

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