As you may or may not know, I'm not exactly a political activist. In fact, I'm fairly quiet when it comes to my political views. Aside from my intolerance for zealots, you can convince me of just about anything if you have a sound reasonable argument. But I do feel the need to speak out now about the Occupy Wallstreet movement, and the flood of posts, both for and against, that seem to be the only thing Facebook wants to show me. (Where have all the cute kitten pictures gone?!?)
So to start with, let's get my views out on the table, then we'll wander into the scary and frightening world of facts. (No one likes facts, so I'll stick them on the bottom of this post) I think people have a good valid reason to be angry. I feel the Occupy Wallstreet and it's sister protests are the best way those Americans have found to express their anger. I suspect many of them don't fully know what they want to change, but they know that they are hurt and angry. Some are simple band wagon hoppers, others are truly driven by the belief that the corporations are to blame for everything and anything, and must PAY. But most I think, are simply hurt and angry.
Looking around, you will find many, many personal pleas and notes exploring life as being in the 99%. But what does that mean exactly? In a nutshell, the 99% represent the everyone who isn't the top 1% by population who control the most wealth in America. In some ways, this makes for a very powerful slogan, in others it's a bit misleading. Because even if we were all living in mansions, or mud huts, there will always BE a 1%. "Ah, but what about the wage disparity being the largest in history for America?" you might say. Historically, we American's haven't really had a problem with wage disparity. After all, isn't that the core of the American dream? Start from being poor and rise to being richer than your friends?
So I don't think the income disparity is the real root of things. No, I suspect the problem is much simpler. America is hurting. The American people are hurting. We've gone from a period of unbelievable prosperity, and suddenly the magic money machine is broken and the bill has come due. And I cast this upon everyone here, not just any one class. The poor over borrowed, the rich over borrowed, the government over borrowed, the corporations over borrowed. Everyone did, because it was ok. Back in the 90s everyone had a credit card. Why? A few reasons. 1) Banks were making a ton of money through the process of massive lending. More loans means more money. And as everyone just kept getting richer, why not? 2) As a whole, America was going into a deep consumer driven period. Buy more stuff, achieve greater happiness! And so we did. We ALL have amazing things that we consider necessities that the rest of the world calls luxuries. Cell phones, high speed internet, TVs, modern appliances. We all have them, we all NEED them, and we all splurged while the getting was good. The banks wanted to loan us the money, and we all wanted STUFF. And the sad thing is, we all believed it was sustainable forever.
But then the happy feeling was gone. The housing bubble finally burst, and with it the illusion that things would just keep going up, everyone would keep getting richer, and we could all borrow forever against the future. It was a literal slap in the face for all of us. Suddenly an entire generation raised on the concept of free money through infinite rotating debt was stuck with that last final bill. No more loans, no more credit cards, just debt. And debt we couldn't pay. Is this the bank's fault? A little, sure. They should have done some due diligence and not made so many loans. But all THEIR experts said the money train never stops. And we are equally culpable. We thought it would never stop either, so we used those cards. No one forced you to charge anything.
I think that underlying pain and panic is what is truly driving these protests. Because we KNOW things are bad, we feel them daily in our debt collection calls, our bills and our unemployment. Not only do we have debts to pay, but no way to pay them! Clearly, this is all someone's fault! But who can we blame? Not ourselves, perhaps ... the banks! Or the corporations!
And yes, I do think they have some blame to shoulder here. Corporations have been setting themselves up for anger in their CEO pay scales for quite some time. (When you set pay based on beating current average pay nationwide ... well, there is only one way for pay to go isn't there? Exponentially higher.) And it's hard not to be irrationally angry when something like a corporation is making massive profit while you struggle to find food to eat. But that really isn't a good reason to go tear them down. A good reason for them to re-evaluate some of their absurd imbalances certainly.
And there is certainly some righteous anger to direct to the banks, after all, we bailed them out didn't we? And it is certainly true that the made some phenomenally poor decisions when it came to Credit Default Swaps. (see footnote for nutshell breakdown on that) And yes, those poor decisions were primarily greed based. But we're America, we REWARD greed. When your country's ideals are based on being the richest you can be, why should we be surprised that our decisions reflect that?
And lest I forget, the government too can get it's share of the blame. There is a lot they could have done to help regulate away some of the risky choices that led us here. But that assumes they understood the risk. And honestly, I'm not convinced they did. I don't think anyone really did, not until hindsight brought it into stark view. And while it's easy to look back and scream "Why didn't you know!?!" it's much harder to honestly step back and review what was decided based on knowledge of the time.
So to you my dear friends, I have but this to say. I hear your pain, and I hope we all get through this trying time. But if you wish to support a cause, please understand what you support. Know what change you want to affect. And most importantly, please stop belittling those who are trying to work through their pain. The protestors aren't "ignorant unemployed homeless" and the bankers aren't all "the man stealing the bread from our mouths."
** Credit Default Swaps **
The Credit Default Swap was a very simple practice in which you loan someone money, and I promise to pay it back if they default, in exchange for a small continuous fee. Why would anyone do this? A few reasons. Banks like them because they don't like risk. The government requires them to keep a % of their deposits on hand. The less risky their loans, the less they have to keep on hand, and the more loans (and therefor profit) they can make. Since the person on the other end of the swap is assuming the risk (after all, they promised to pay off the debt in case of a default) banks need to keep less money, and make more loans. This isn't bad on it's own, after all, the person ensuring the default is understanding the risk they are assuming, right? Sadly this wasn't the case. People who bought the swaps treated it as free money. (The banks sold them as low/no risk) And even worse, banks were buying each others swaps. (Bank A is ensuring Banks B's loans, and vice versa) And since the swaps didn't get added to the risk calculations, suddenly everyone is on the hook in the case of a default. Which is exactly what happened with the great housing crash. When all the home loans suddenly defaulted, all the credit default swaps kicked in. But no one ever thought they would, so no one had the money set aside to PAY them out. Boom goes the banking industry. (and the stock market, but that's a far longer explanation)
So to start with, let's get my views out on the table, then we'll wander into the scary and frightening world of facts. (No one likes facts, so I'll stick them on the bottom of this post) I think people have a good valid reason to be angry. I feel the Occupy Wallstreet and it's sister protests are the best way those Americans have found to express their anger. I suspect many of them don't fully know what they want to change, but they know that they are hurt and angry. Some are simple band wagon hoppers, others are truly driven by the belief that the corporations are to blame for everything and anything, and must PAY. But most I think, are simply hurt and angry.
Looking around, you will find many, many personal pleas and notes exploring life as being in the 99%. But what does that mean exactly? In a nutshell, the 99% represent the everyone who isn't the top 1% by population who control the most wealth in America. In some ways, this makes for a very powerful slogan, in others it's a bit misleading. Because even if we were all living in mansions, or mud huts, there will always BE a 1%. "Ah, but what about the wage disparity being the largest in history for America?" you might say. Historically, we American's haven't really had a problem with wage disparity. After all, isn't that the core of the American dream? Start from being poor and rise to being richer than your friends?
So I don't think the income disparity is the real root of things. No, I suspect the problem is much simpler. America is hurting. The American people are hurting. We've gone from a period of unbelievable prosperity, and suddenly the magic money machine is broken and the bill has come due. And I cast this upon everyone here, not just any one class. The poor over borrowed, the rich over borrowed, the government over borrowed, the corporations over borrowed. Everyone did, because it was ok. Back in the 90s everyone had a credit card. Why? A few reasons. 1) Banks were making a ton of money through the process of massive lending. More loans means more money. And as everyone just kept getting richer, why not? 2) As a whole, America was going into a deep consumer driven period. Buy more stuff, achieve greater happiness! And so we did. We ALL have amazing things that we consider necessities that the rest of the world calls luxuries. Cell phones, high speed internet, TVs, modern appliances. We all have them, we all NEED them, and we all splurged while the getting was good. The banks wanted to loan us the money, and we all wanted STUFF. And the sad thing is, we all believed it was sustainable forever.
But then the happy feeling was gone. The housing bubble finally burst, and with it the illusion that things would just keep going up, everyone would keep getting richer, and we could all borrow forever against the future. It was a literal slap in the face for all of us. Suddenly an entire generation raised on the concept of free money through infinite rotating debt was stuck with that last final bill. No more loans, no more credit cards, just debt. And debt we couldn't pay. Is this the bank's fault? A little, sure. They should have done some due diligence and not made so many loans. But all THEIR experts said the money train never stops. And we are equally culpable. We thought it would never stop either, so we used those cards. No one forced you to charge anything.
I think that underlying pain and panic is what is truly driving these protests. Because we KNOW things are bad, we feel them daily in our debt collection calls, our bills and our unemployment. Not only do we have debts to pay, but no way to pay them! Clearly, this is all someone's fault! But who can we blame? Not ourselves, perhaps ... the banks! Or the corporations!
And yes, I do think they have some blame to shoulder here. Corporations have been setting themselves up for anger in their CEO pay scales for quite some time. (When you set pay based on beating current average pay nationwide ... well, there is only one way for pay to go isn't there? Exponentially higher.) And it's hard not to be irrationally angry when something like a corporation is making massive profit while you struggle to find food to eat. But that really isn't a good reason to go tear them down. A good reason for them to re-evaluate some of their absurd imbalances certainly.
And there is certainly some righteous anger to direct to the banks, after all, we bailed them out didn't we? And it is certainly true that the made some phenomenally poor decisions when it came to Credit Default Swaps. (see footnote for nutshell breakdown on that) And yes, those poor decisions were primarily greed based. But we're America, we REWARD greed. When your country's ideals are based on being the richest you can be, why should we be surprised that our decisions reflect that?
And lest I forget, the government too can get it's share of the blame. There is a lot they could have done to help regulate away some of the risky choices that led us here. But that assumes they understood the risk. And honestly, I'm not convinced they did. I don't think anyone really did, not until hindsight brought it into stark view. And while it's easy to look back and scream "Why didn't you know!?!" it's much harder to honestly step back and review what was decided based on knowledge of the time.
So to you my dear friends, I have but this to say. I hear your pain, and I hope we all get through this trying time. But if you wish to support a cause, please understand what you support. Know what change you want to affect. And most importantly, please stop belittling those who are trying to work through their pain. The protestors aren't "ignorant unemployed homeless" and the bankers aren't all "the man stealing the bread from our mouths."
** Credit Default Swaps **
The Credit Default Swap was a very simple practice in which you loan someone money, and I promise to pay it back if they default, in exchange for a small continuous fee. Why would anyone do this? A few reasons. Banks like them because they don't like risk. The government requires them to keep a % of their deposits on hand. The less risky their loans, the less they have to keep on hand, and the more loans (and therefor profit) they can make. Since the person on the other end of the swap is assuming the risk (after all, they promised to pay off the debt in case of a default) banks need to keep less money, and make more loans. This isn't bad on it's own, after all, the person ensuring the default is understanding the risk they are assuming, right? Sadly this wasn't the case. People who bought the swaps treated it as free money. (The banks sold them as low/no risk) And even worse, banks were buying each others swaps. (Bank A is ensuring Banks B's loans, and vice versa) And since the swaps didn't get added to the risk calculations, suddenly everyone is on the hook in the case of a default. Which is exactly what happened with the great housing crash. When all the home loans suddenly defaulted, all the credit default swaps kicked in. But no one ever thought they would, so no one had the money set aside to PAY them out. Boom goes the banking industry. (and the stock market, but that's a far longer explanation)
