09.24.07
Money Money Money!
The last couple of months have been an interesting time for America. From the growing disillusionment of the the American people, to the increasing agitations of a congress whose feelings have turned on the war. This has also been a time of growing trouble for the US economy which has seen an increasing pressure from the recent mortgage fallout. Like many financial crises of the past, this one is directly affecting many of America’s underclass, but has become an assault upon their housing as the major banking institutions rush to re-evaluate their loan structures that were handed out willy-nilly while money was so cheap following September 11th.
What we are now seeing is an American Dollar that is at its lowest level in many years and a slew of increasingly grim predictions for the future of the country. Not that I seek to be overly pessimistic, but I wonder how easily we will sail through this latest mess. After all, what this situation will accomplish is to hurt major banks (who will be bailed out by the government), and take a great deal of wealth away from many of the nations poor who had been enticed by the low mortgage rates (who will not, of course, be similarly bailed out). I unfortunately see yet another opportunity to lower the floor on the US working class.
As I have suggested earlier, this constant devolution of the middle and lower stratum of incomes can have a crippling effect on the middle and long term effectiveness of economy. This decreasing floor is the cushion that has been busily absorbing the circular blows of the the global economy - slipping just a little each time. While the flexibility allowed to US workers is admirable, the weighing of the scales is heavily in favor of the employer. Our system allows for lower wages, reduced benefits, and minimal recourse in order to boost short term profit and efficiency. This means that when a financial crisis hits, there is little that can be done in order to soften the blow to the individual workers and their families and they will usually find themselves out of work or with less useful employment.
The traditional wisdom has held that in order to best service the people in these times is to present companies with dollops of cash in order to help them keep people employed, even though this money is usually used to prop up executive salaries and maintain normality for the highest levels of the operational pyramids. Banking institutions don’t actually employ many of these victims, as they are largely underemployed urban poor. I wonder than, given the pressure that the present crisis is placing on disadvantaged workers and their housing, if a possible solution to our present crisis might be to ignore to corporate middle man, and offer assistance directly to the people effected by this latest housing crash.
After all, while there is no question that the for-profit housing system in the US is a highly efficient mechanism for distributing property (the US does have one of the highest home-ownership rates in the world), it has failed to provide realistic and fair terms to people in this case. As a result, the government should not intervene in a set of private institutions (look at how bloated the health care system is to see what happens when the government promises unlimited handouts to private institutions). Companies should be allowed to succeed or fail, but efforts should be made to speed the transition and lessen the suffering of their victims - especially in cases where fundamental human needs like food, clothing, and shelter are on the line.
By assisting specific cases, such as those who are about to lose their home after accepting a sub-prime mortgage, a great deal of damage can be offset from this crisis. After all, the strength of the domestic market is directly tied to the ability of people to actually spend money in it, and their ability to feel confident doing so. So long as one is worrying about the fate of one’s family and home, it is difficult to justify the purchase of a new car or television, but a large part of the health of the US economy is based directly on that correlation.