The more I read on the current financial crisis and the more I think about the ramifications, the more I realize that September 2008 will probably have as much of a lasting effect on our nation as has September 2001. Thatâ€™s because what weâ€™ve witnessed is not just a political failure and not just a financial failure. This is a cultural failure.
Victor David Hanson has it right when he lays the blame at all our feet. Yes, insufferable Wall Street greed played a major role as did incompetent, ignorant, servile and just plain corrupt Washington politicians. Iâ€™d like to lean back in my chair, point fingers and quietly absolve myself and all the rest of us who neither work on Wall Street nor in Washington. But I canâ€™t.
A lot of us took part in the credit-shuffling game that was the real estate boom. I was even one the lucky ones who sold a property at a ridiculous profit. I didnâ€™t intend for my home to be such a tremendous investment, but I sure as heck didnâ€™t care what cultural forces or what financial shenanigans made my windfall possible. I took the money. Gladly.
A lot of other people did too. And many of those who eventually got caught holding the bag were not innocent victims of the system. They were players. They knew they were taking out unsustainable loans but they believed the profits they could make in the market more the justified the risk. They were stupid and wrong. Their banks were stupid and wrong. Our culture that demanded easy credit and high returns was stupid and wrong.
We took the wealth and prosperity part of the American Dream and jettisoned the hard work part. We believed that the house flippers on TV were smarter and more interesting than the people and businesses doing real work and slogging out real, if mundane and small-margined, profit. Even as many of us decried our nationâ€™s free-spending, gilded-age ways, we grumbled when our investment accounts fell short of the high returns enjoyed by others.
Blame the Wall Street profiteers. Blame the Washington imbeciles, cowards and thieves. They deserve our scorn and whatever punishment the law allows. But $700 billion is not the indulgence that absolves the rest of us. We have much harder tasks ahead if we really want to get our nation back on track. Now, I donâ€™t know how to change a culture. Chances are, it will take much more than a rocky autumn to make most people stop lusting after easy credit and high investment returns. These bailouts might just be postponing the needed reckoning.
But Iâ€™d like to think that these last few weeks have at least opened the eyes of enough of us â€“ have made enough of us realize that wealth is not something that can be generated quickly if we want to generate it sustainably. That sounds like commonsense. But, apparently, most of us had, in one way or another, forgotten the realities of markets. The market has shown us our folly. Letâ€™s see if enough of us can remember the lesson.