Home > Economics, Faith, Politics > You’re greedy! But wait, so am I?

You’re greedy! But wait, so am I?

So my buddy Neil wrote about Obama’s plan to tax wall street. Read it. He’s a smart guy and has a legit writing gig although definitely too Democratic party for my tastes. =)

Originally, I was going to write a rebuttal discussing how a punitively natured tax is bad form; whats to say banks won’t conduct their shenanigans outside the US, or move taxable liabilities off the books….yada yada. Well then again, Obama asked nicely, so maybe they’ll oblige:

“Instead of sending a phalanx of lobbyists to fight this proposal, or employing an army of lawyers and accountants to help evade the fee, I suggest you might want to consider simply meeting your responsibilities,”

Regardless, lets talk about greed for a sec.

People are quick to point the finger of blame at “greedy, Wall Street businessmen” maybe rightfully so. It should piss people off that comapanies which were ostensibly on the brink of failure and bailed out by taxpayer money are now dishing out loads of bonus money to the very people who might have caused part of this crisis. But lets temper those sentiments for a second. Certainly it might be easy for us to excoriate the “rich” for their excess and greed, but the beginning symptoms of this problem manifested themselves in the form of people who had no business paying their mortgages. As Michael Lewis wrote about AIG,

“Millions of people borrowed money they shouldn’t have borrowed and, not, typically, because they were duped or defrauded but because they were covetous and greedy: they wanted to own stuff they hadn’t earned the right to buy.”

Are we to pretend that the vice of greed is only exclusive to rich people? Was the average American not buying homes they could not afford and taking out credit cards their income could not justify? Lets remember what happened here: Ordinary Americans taking out ridiculous mortgages, banking on the fact that home prices would continue to rise (astronomically too) and having no capability of covering their debt otherwise. How about you with the credit card app in your hand? You put down 100,000 as your income, even though you work at Mickey D’s? Greed was just as rampant in Downtown Detroit and Suburban Springfield as it was in Midtown Manhattan.

As I was discussing this topic with a friend today, we analyzed at a very general level how this mess got started in the first place. A point was made that the finance guy peddling what we now know see as toxic assets obviously did not understand the implications of his actions. He was assured by others that these were “triple A” and “risk-free” securities. He bought insurance to ensure that even if the securities failed they would be backed up. He looked across the street saw his buddy making a killing selling these products. He saw his buyers absolutely enthralled that they were getting stellar returns. Nobody did any homework and boom goes the dynamite.

This recession did not occur because a few ill-willed finance douches decided to incur their wrath on society. This more akin to a bunch of smart ass kids teaming up to do a group assignment, and when due date comes, everybody assumed somebody else did the work. I don’t know about everybody else, but these shortcomings don’t sound so spectacular or dramatic at all.

And maybe that is the exact problem. We are all used to games like Jenga, since we can clearly label the loser. The tower is fallen and the culprit is holding the proverbial piece of the puzzle. Yet in this grand economic version of Jenga, surrounded by our crumbled towers, we are all holding THAT piece. Our most clever solution has been to just rebuild these towers and in these vulnerable times its easy to embrace such a solution. Even the best of us, only slight scathed, are collecting our scraps and wondering how we can achieve that wondrous state of satisfaction. Yet its an illusory hope, the achievements we have mustered today become increasingly boring and irrelevant tomorrow. (see Michael Jordan)

That is why its silly for us to ask ourselves these questions about why OTHER people screwed up. Are these not questions we could fiddle around a bit with and ask ourselves? Its clear we all need to rebuild, but something tells me it goes a little bit deeper than credit cards and mortgages. What we really seem to be ignoring is our very human condition. Nowadays it might be taboo to say it, but Christians call this word sin. Dah! BDK How can you call me a sinner???? Sinfulness is reserved for  Hitler and Kim Jong Il and of course, George W. Bush, not me!!

Perhaps with a little introspection we can begin embracing true humility. When we realize we are just pretending when we think our deeds our so much better than others, we fail to see excess creep in other ares of our lives. Preaching savings, thriftiness and moderation is wonderful, but doing it is ten times more difficult.

“Why do you look at the speck of sawdust in your brother’s eye and pay no attention to the plank in your own eye? How can you say to your brother, ‘Let me take the speck out of your eye,’ when all the time there is a plank in your own eye? You hypocrite, first take the plank out of your own eye, and then you will see clearly to remove the speck from your brother’s eye. “

You see the systematic issue here was not just easy credit, or greedy executives or even dumb homeowners. My point is we are satisfied with blowing our noses but not curing the damn cold! This was a scramble to prove our worth to society, to distinguish ourselves in society as “Big Swinging D!cks” and “Masters of the Universe”. Unsatisified even in our state of blessedness, we need to inflate our human balance sheets with hope the enormity of our assets make us somewhat unique, different or better. If only I can run faster! if only I can be smarter! if only I could make more money! Humanity needs to embrace a true heart change; one that doesn’t base its self-value on a successful stock portfolio or the square foot of a home.

Until we can get to that point, we shouldn’t be surprised when our own Jenga towers crumble again. I wonder why we keep on rebuilding the tower even though it eventually falls down again.

Gather together and come; assemble, you fugitives from the nations. Ignorant are those who carry about idols of wood, who pray to gods that cannot save. Isaiah 45:20

We’ve all stopped playing stupid games like Jenga; maybe we can stop finding our redemption in our own temporal gains.

Romans 3:23-24

Gather together and come; assemble, you fugitives from the nations.
Ignorant are those who carry about idols of wood, who pray to gods that
cannot save.
  1. January 22, 2010 at 9:45 pm

    Good (evangelical) analysis – one nuance i would add is that the concept of “proportionality” must be taken into consideration. You are right in saying that there is enough culpability to go around and that it cannot be myopically concentrated on “Wall Street Execs,” however, the social consequences of illicit economic behavior are largely determined by the size of the agent’s balance sheet. Yes, both the trader who created and sold risky/junk securities and the person who took out a mortgage he/she could not afford made poor errors in judgment, however, the social consequence of the former was exponentially greater than the latter (though i recognize there is a interdependence that must be recognized). Moreover, what i think really makes people (legitimately) upset is that “Wall Street Execs” have the economic resources that enable them to hedge themselves off from the downside of collective irresponsible behavior, and unfortunately this is not true from your average blue-collar worker. That said, I think one could find a lot of currency in the Christian principle “to whom much has been given, must is expected”.

    Lastly, the Church tells us that we should conduct our lives in a manner that gives “preference” to the marginalized and I think this should be applied to the realm of public policy, even when it counters the logic of the Free Market…

  2. JK
    January 23, 2010 at 6:50 pm

    that was exactly what i was thinking!

  3. January 23, 2010 at 8:44 pm

    Fascinating post, BDK, and an often ignored point by the mainstream media. We were all responsible for the financial crisis.

    I suppose where you and I differ is not so much in our diagnosis of the disease (I agree, greed is everywhere, not just on Wall Street), but in our medicine for the problem.

    I treat human behavior as more or less exogenous and constant. Efforts to temper it, either through faith, institutions, norms, and culture usually fail. What we instead have is a means of organizing society around a given set of behavior preferences – namely sin. If greed is the primary driver of economic growth (Smith), then it is also the driver of crisis.

    I blame Wall Street more than the average American for several reasons:
    1) They provided channels for people to hurt themselves.
    2) They absorbed our country’s best and brightest. I would contend that highly educated technocrats have a higher responsibility in society than clueless immigrants who purchased subprime mortgages.
    3) They simply had the power to do more damage than the average homeowner. Greed amplified with billions of dollars of leverage is far more potentially damaging than me borrowing too much on a credit card.

    Anyways, loved the post. Thanks for the shout-out. And stop calling me a Democrat.


  4. Perley
    January 24, 2010 at 9:08 pm

    Well BDK you have found the cause of our financial collapse but you must go back in time to the Clinton administration and see how the started the collapse.
    Dummycrats decided that every American should own a house (residence) and they forced the financial industry to create these unaffordable mortgages with adjustable rates and balloon notes etc. Now the mortgage companies had loaned out all they were allowed to and had to fill up again at the money mill. This turned into what were termed class a notes/ bonds etc. Now the mortgage companies are flush with cash and the cycle starts all over again. Down the road we see what happens.
    1. Real estate increases in value
    2. People still want homes
    3. They cannot afford conventional mortgages
    4. They get adjustable or balloons and hope to sell before foreclosure.
    5. Again mortgage companies run out of eligible funds causing more bad notes
    6. Enter foreclosures that cause failure of bonds and notes
    7. Collapse

  5. January 25, 2010 at 5:54 pm

    Perley, your critique of Clinton’s reform/liberalization of the community reinvestment act, though partially accurate, are also largely reductionist. Moreover, I think you are misappropriating responsibility to the architects of good legislation, instead of the seedy mortgage brokers who exploited it.

  6. longley
    January 25, 2010 at 7:14 pm

    Amen Kevin.

    BDK, there are two sides to every financial transaction. Sure, homeowners got greedy and bought houses they shouldn’t have. Well, most of them are having a pretty rough time right now, and baring any surprise family wealth will probably never recover from that decision. Financial institutions got greedy and securitized mortgages that were financially unsound, and when they fell on hard times were bailed out by the government (i.e. a collection of individuals partially represented by those same homeowners). Now I agree with the bailouts, but to argue that there was any parity in consequences for the two sides of that initial financial transaction is absurd.

  1. February 17, 2010 at 1:07 am

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