In some ways, the subprime mortgage mess and housing crisis are metaphors for what has come over America in recent years: A certain connection between hard work, achievement, and accountability has been broken. We’ve become a subprime nation that thinks it can just borrow its way to prosperity—putting nothing down and making no payments for two years. Subprime lenders told us that we could have the American dream—a home of our own—without the discipline or sacrifice that home ownership requires. We didn’t need to study hard and build a solid educational foundation. We didn’t need to save an build a solid credit record. The bank around the corner or online would borrow the money from China and lend it to us—with a credit check no more intrusive than the check you get at the airport when they make sure the name on your airline ticket matches the one on your driver’s license. When the whole pyramid scheme, operated by some of our best financial institutions, collapsed, everyone from simple homeowners to unscrupulous lenders looked to the government for a bailout. The politicians accommodated them, even though everyone knew that the lenders had not been betting that their customers’ penchant for hard work or frugality or innovation would enable them to make the payments. They were simply betting that the housing bubble would keep driving up the prices of homes and that mortgages rates would keep falling—that the market would bail everybody out forever. It did—until it didn’t. As with out houses, so with our country: We have been mortgaging our future rather than investing in it?So, the question then becomes, what to invest in?
Wednesday, September 24, 2008
A Metaphor for Subprime America
An eerily prophetic excerpt from Thomas Friedman's "Hot, Flat and Crowded: Why We Need a Green Revolution--and How it Can Renew America",