Opinion
Fiscal crisis swindles our ignorance
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Also by Jack Garigliano:
- Liberal arts need funds and focus (November 12, 2008)
- Obama is first step, now get off your ass and work (November 6, 2008)
- GOP stoops too low for Joe Sixpack to stomach (October 30, 2008)
- Pluralism failed by UW's silence (October 16, 2008)
- Holistic admissions hurt the best (October 9, 2008)
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As punishment for serving chunks of his son’s flesh to the gods for dinner, the Greek demigod Tantalus was damned to stand for eternity in a pool of water. Every time Tantalus knelt down to drink from the pool, the water would flow away from his cupped hands. And every time he tried to pluck the fruit from a nearby tree, the branches would lift the fruit just inches away from his grasp.
Now imagine the pool of water and the fruit represent the severity of our current financial catastrophe, and that I, as Tantalus, am struggling to grasp the danger we as a nation purportedly face. No matter how much I try to connect with the sheer panic running through the media, I don’t feel the same sense of dread I know I should feel in the face of what many are calling the greatest economic crisis since the Great Depression. It’s not that I don’t try; it’s not that I don’t want to wrap my mind around the potentially catastrophic consequences for me, the nation and the world. I simply can’t.
So far, most of the coverage frames the problem in terms irrelevant to me as a college student. I believe many, if not most, college students feel similarly detached and disaffected from our nation’s economic woes. It’s not necessarily our fault (though I’m sure there are students who avoid current events like the plague), but the fault of those charged with the task of presenting the problem to us.
The media have panicked over the short-term effects of the fiscal crisis, but signs of these effects barely exist on campus. A plunging stock market, failing investment banks and scarce mortgages have little direct impact on most students. Stocks are the plaything of adults with full-time jobs who make enough money to invest some of it in Wall Street, not students whose sole financial goal is paying for college. Investment banks, too, hold (or held) the money of businesses and those who have the full-time income to invest. And aside from the sprawling 12-acre estate that I own on the other side of Lake Mendota, virtually no houses are owned by college students, so mortgages barely apply.
Meanwhile, in spite of the meltdown in the “adult” world of investing, financial institutions specifically connected to college students are doing quite well. According to the Wisconsin State Journal, credit union income statewide has gone up 17.2 percent in the last year. The UW Credit Union, one of the largest credit unions in the state, has been opening at least one new branch a year. This, unfortunately, only adds to the short-term and temporary insulation that students might feel from the current economic crisis.
Coverage of the crisis would be much more useful if it suggested broader long-term or local effects instead of squabbling over what or who caused the short-term mess. How will the entry-level job market be affected? Will local government lose funding, and what programs will they need to cut? Which specific industries could get hit the hardest? What are some ways to adapt to the looming dearth of loans? Answers to questions like these are slowly starting to trickle in. An article in yesterday’s The Badger Herald revealed that Madison has already lost $500,000 from its budget due to declining investment revenue from the crashed market. Another article mentions that UW System chancellors will not receive pay raises this year. A particularly insightful article in the New York Times titled “Lesson from a Crisis” describes the difficulty we will face in getting any kind of loan if things continue their course. We need more of this kind of coverage and analysis; we can only understand the hazards we face and the steps we must take to prepare for them through such information.
Because even though I can’t quite grasp the fear that permeates the newspapers and the Internet, I know I must keep trying. This is a crisis that could easily rain down on all of us, not just those with a 401(k). Our entire financial system is crumbling from the ground up, everyone is hurling the blame at each other like monkeys flinging shit in the cages of a zoo, but nobody knows how to fix it. Despite the major debate over the bailout, nobody is really sure if or how it will work. During the presidential debates last Friday, neither Barack Obama nor John McCain could name any action they would take in response to the crisis, reverting instead to stump speeches filled with buzzwords like “earmarks” or “alternative energy” that they would have made even in the absence of a crisis. Frustrated moderator Jim Lehrer, his voice cracking with desperation, pressed them to answer the question, but to no avail. Things could get ugly fast, and we need to know where the shit will fly once it’s finished hitting the fan.
Jack Garigliano (garigliano@wisc.edu) is a junior majoring in history and English.
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This bailout is like the Iraq war surge. If there’s a problem, just add to it.
Fuck this article and its author. Educate yourself in times of war. This is the biggest thing to happen in America since World War 2. So shut your mouth, idiot.
The author laments: “but nobody knows how to fix it”
Nobody can “fix it”— the financial toothpaste is already out of the tube. The only thing left to do is to pay the piper and remember that there are NO FREE LUNCHES!
Demonrats’ CRA regulations REQUIRED banks to make bad loans to unqualified borrowers. Meanwhile, “community organizer” thugs (racial hucksters) extorted millions from those same banks with threats of all manner against executives. Stanley Kurtz explains; http://www.nypost.com/seven/09292008/postopinion/opedcolumnists/osdangerouspals_131216.htm
WHAT exactly does a “community organizer” do? Barack Obama’s rise has left many Americans asking themselves that question. Here’s a big part of the answer: Community organizers intimidate banks into making high-risk loans to customers with poor credit.
In the name of fairness to minorities, community organizers occupy private offices, chant inside bank lobbies, and confront executives at their homes - and thereby force financial institutions to direct hundreds of millions of dollars in mortgages to low-credit customers.
In other words, community organizers help to undermine the US economy by pushing the banking system into a sinkhole of bad loans. And Obama has spent years training and funding the organizers who do it.
THE seeds of today’s financial meltdown lie in the Commu nity Reinvestment Act - a law passed in 1977 and made riskier by unwise amendments and regulatory rulings in later decades.
CRA was meant to encourage banks to make loans to high-risk borrowers, often minorities living in unstable neighborhoods. That has provided an opening to radical groups like ACORN (the Association of Community Organizations for Reform Now) to abuse the law by forcing banks to make hundreds of millions of dollars in “subprime” loans to often uncreditworthy poor and minority customers.
Any bank that wants to expand or merge with another has to show it has complied with CRA - and approval can be held up by complaints filed by groups like ACORN.
In fact, intimidation tactics, public charges of racism and threats to use CRA to block business expansion have enabled ACORN to extract hundreds of millions of dollars in loans and contributions from America’s financial institutions.
Banks already overexposed by these shaky loans were pushed still further in the wrong direction when government-sponsored Fannie Mae and Freddie Mac began buying up their bad loans and offering them for sale on world markets.
Fannie and Freddie acted in response to Clinton administration pressure to boost homeownership rates among minorities and the poor. However compassionate the motive, the result of this systematic disregard for normal credit standards has been financial disaster.
ONE key pioneer of ACORN’s subprime-loan shakedown racket was Madeline Talbott - an activist with extensive ties to Barack Obama. She was also in on the ground floor of the disastrous turn in Fannie Mae’s mortgage policies.
Long the director of Chicago ACORN, Talbott is a specialist in “direct action” - organizers’ term for their militant tactics of intimidation and disruption. Perhaps her most famous stunt was leading a group of ACORN protesters breaking into a meeting of the Chicago City Council to push for a “living wage” law, shouting in defiance as she was arrested for mob action and disorderly conduct. But her real legacy may be her drive to push banks into making risky mortgage loans.