Monday, September 15, 2008

Greed is not good

I've always been fascinated with economics, even though I never formally studied it. The closest thing was when I was in high school and I took a class that followed the stock market and introduced the tenants of investing. We all competed with each other over who's stock picks would gain the most. But ever since then I've been keen to know about investing, 401k's, mortgages, interest rates, credit scores and so on. You can't know too much or be too careful when it comes to finances.

Like the other day, when we received a letter from Countrywide (the company that holds our mortgages) saying they endured a security breach. One of their ex-employees may have sold our information (along with 2 million other people's) for profit and nefarious purposes. This employee allegedly exploited a security loophole in their computer system and got a hold of "client files, which includes names, addresses, mortgage loan numbers and social security numbers." Well that's just excellent.

Not only are mortgage lenders in a world of hurt because of decreasing access to credit and lots of bad debt due to defaulted loans, but they can't turn their backs on their own people for fear that a disgruntled employee will bring them down from the inside. I have made such a fuss about trying to keep our info secure by shredding financial docs and not giving out my social security number needlessly. But when the people who are supposed to have it can't be trusted either--that's a quandary. I was telling Ken the other day that we're getting to the point where mandatory biometric identification will be the only way to properly identify ourselves: retina scans, fingerprints, saliva DNA...

And then there is today's scandal and intrigue: Lehman Bros. filed for bankruptcy, Merrill Lynch sold for half its value to Bank of America and the stock market plunged 500 points. I think everyone has cause to be worried. Naturally for the impact on the price of goods, accessibility to credit and our stance in the world economy. But more than that, the average person should also be concerned with how we got to this point.

The intrigue of a mystery gets your attention but the details reveal people's innermost desires, what motivates them. And the mystery of how the economy got this way qualifies as a bonafide whodunit. But you might be thinking, 'this is all so complicated and over my head,' right? Well, not really. Do yourself a favor and listen to this streaming episode on This American Life called "Giant Pool of Money." It's quite possibly the best primer for a layperson to grasp the in's and out's of the financial turmoil we now find ourselves in. You will feel so smart after hearing it. And then, as in my case, you might feel a mix of indignation and disgust.

Why? Because it seems that no matter how evolved, sophisticated, enlightened and indulged we humans become, greed shows up and tempts our lesser selves. Greed causes people to make bad, short-term, destructive decisions. Greed urges people to buy houses they know they can't afford, lenders to qualify those people for outlandish mortgage amounts and employees at that mortgage lender to raid customer information for profit. And when you look at other issues we have, like why did we start an unprovoked war with a Middle Eastern nation flush with oil, why didn't car companies start the electric car revolution a whole decade earlier when they had the technology or why do products today feel largely disposable and not made very well, it again comes back to greed.

And specifically greed of money. Isn't it stupid that something as simple as that is at the heart of what is causing all this suffering? Professionals who crunch numbers, assess risk and balance budgets for a living, ignored common sense and succumbed to a tide of quick profits. It honestly makes me lose faith in human beings a little bit. But then I think perhaps it's lessons like these that teach us what is truly valuable. Quick profits are especially not valuable when it comes at the expense of our country's sovereignty. Guess who now owns a lot of our collective debt? Hint: They just hosted the Olympics and they have lots of drummers.

The troubled economy is not someone else's problem--it's all of ours.

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