3/24/16
People, especially the “better” people on Wall Street, in Washington, and the media
wonder why the average, middle class person is so angry that s/he is willing to
vote for a guy as flawed as Donald Trump. To most of us, this matter doesn’t merit
much consideration due to the answer’s being so obvious, but then most of us
are not muckety-mucks on Wall Street, in Washington, or in the media. However, some of us are given, perhaps too
given, to contemplation of things of great import to the Republic.
One, and only one, of the reasons that people are so
angry that they embrace even Trump
has its genesis in the financial bailouts that supposedly “solved” the problems
that led to the market and economic debacle of 2008-’09. The banks and other major financial
institutions got into trouble due to the poor loans they had made, packaged,
and purchased. Rather than see them
fail, the Fed, with the full backing
and cooperation of the Bush/Obama
Administration, engaged in a financial bailout that involved pouring a
Niagara of liquidity into the economy, reducing short term interest rates to
zero, and inflating the prices of debt instruments throughout the system,
bringing longer term interest rates to historic lows.
If one cuts through all the clutter and the noise,
borrowers got in over their heads, with the full complicity of the wizards of Wall Street, and couldn’t
repay their loans. Rather than let them
suffer the consequences of their irresponsible behavior, the government
effectively forced conservative savers to lend their lifetime savings to these
financial miscreants at zero and near zero interest rates. The financially responsible got, to use a
technical financial term, screwed in order to bail out the financially
irresponsible…or worse.
And the deep thinkers wonder why people are so angry with
the establishment that dominates Wall Street, the media, and Washington.
Note: I have to
thank a long ago boss of mine, an unforgettable character named Doran Pessler
(unless I’ve butchered the spelling) at the then National Bank of Detroit, for
the expression used in the title of this missive. Doran taught me long ago that, in business,
it’s never not the money, as in “It’s not the money…it’s the money.” So thanks, Doran, wherever you are!
I think this is a great idea to consider, Prof Quinn. I think much of the national political debate is too caught up in persons & present, when much of the public is STILL in a perilous position when it comes to finances. As your earlier posts considered the War on the Elderly when it comes to interest rates and risk tolerance, conditions are still very unsettling when looking at what it would mean to actually SAVE your money these days. I've read a few recent articles talking about how folks are paying down consumer debt and putting off purchasing a home, even at today's low rates. I just hope that's because regular folks learned the lessons in spite of Wall Street's get out of jail free card.
ReplyDeleteThanks, Matt. I hope all is well. I start 505 in Naperville tonight, so I'll be thinking of you and of all my former students.
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