Posted by
Andrews on Thursday, October 16, 2008 1:31:21 PM
I still hear people, on both sides of the political spectrum, arguing that "greed" caused our current financial crisis. I am still at a loss to understand how anyone can believe this. Even if you aren't an initiate into the world of high finance, it seems to me the basic concepts are simple enough that no one should be able to think "greed' is behind our problems.
Here is the problem in a nutshell. There are many mortgages out there on which people are no longer making payments, and where the house used for collateral will not cover the amount owed, so those holding the mortgages face massive losses.
Now, tell me how those making those loans, or even buying those loans, were driven by "greed". Think about it in terms of your own life. If your friend wants $50,000, but you think he would not pay back, would you get rich by lending him the money and then not being repaid? Would it make it better if he offered a Yugo as collateral? So, if you would not be driven by greed to loan money you would never see back, why would "greed' motivate companies to throw away their own money in the same way?
There is no greed here. If banks wanted to make bad loans, they have had that ability since time immemorial. The fact that they did not until the Clinton administration and their Democrat allies in the congress forced them to do so suggests that making such loans is AGAINST their interests. They were not "predatory lenders", they were bullied lenders, bullied by the government into making loans no sane individual would.
Here, to make it very simple. If they were "predatory lenders" they would have been making money. As they aren't, there is another explanation. And government meddling sure fits the bill.
So, please, can we stop whining about "greed"? Just because some investment bankers and CEOs live better than you do does not mean they are doing anything wrong. You accept that actors and baseball players make a fortune, even when their teams lose or their movies flop, why do you get so upset when a CEO gets paid even though his company tanks?
Get over class envy, it leads to bad conclusions, and does nothing to resolve the underlying problem. Lynching every CEO will not help the economy, and it will leave the underlying problem, federal government meddling in lending, completely intact, to bring a rerun of this same problem in another decade.