Competition is a never-ending race of everyone against everyone else. Everyone is a worker, but everyone is a consumer too. As we wrap up Mortgage Blues for another year 2008 has been chaos to some, but very predictable to others. When we told an investor group to dump Fannie and Freddie we were told our predictions could never happen.
Out of the chaos the ratings companies give the illusion that they could predict, on a broad scale, what would happen. Investors give the same illusion. Do we understand the financial system, or more likely, do we simply have the illusion that it would work?
Why did mortgage workouts require damage to one’s credit score? Is there a relationship between the war in Iraq, the administration’s desire to manufacture money with our housing equity, and failures through duplicity? War might be considered an extension of economies rather than an extension of politics. Late in December 2008 we see OPEC nations angry with Russians over oil, and China angry with Germany and the UK over bond redemption.
Is there a diminished responsibility or no responsibility felt toward those in whom we trust? Subprime, CDO’s, corporate greed and market excesses fueled by a flood of foreign cash were but part of the problem. Whether fodder for debate on ethics in business, or straight capitalism, the United States returned poisoned paper and poorly rated investments to the rest of the world.
Rebuilding the countries of Eastern Europe put a tremendous financial strain on the countries of Western Europe following the Second World War. Today, however, while the International Monetary Fund and others begin to look at the United States, the cost to rebuild economies of many countries also puts a tremendous strain on global finance.
Lack of trust and confidence dominates financial markets, thus no bailout will solve the problem. Banks don’t trust other banks, and money is not flowing like it once did. It is true in the United States and around the world. At a time when doubt is cast on regulatory oversight, or lack of it, the Madoff scandal drove the point home. Now suicide related to the Madoff scandal is making the news. Is it 1929 all over again?
Honor is something inside yourself that you owe to others, as is respect and trust. While suicide may not be the answer, honor is craved even by those who do not have it. While the financial system may not be understood, and simply gives the illusion that it works, the lack of honor allowed people – men and women – to poison the system upon which they too relied for income, stability, and a better life.
Which organizations, and who within them, sacrificed that honor, and the trust of their fellow Americans, will be investigated in 2009 and well beyond.