CNN yesterday broadcasted their Special Investigations Unit program on mortgage meltdown.I'm not a big fan of all those TV "talking heads" and self-proclaimed financial (or, like in this case, mortgage) experts, but one thing I couldn't help noticing: CNN, like many other major media outlets, portrayed the borrowers posed to lose their houses in foreclosures as unquestionable victims, and financial institutions as , obviously, villains.
It seems to me that these somewhat simplistic views are quite far from reality( although, as a doctor and a researcher I should now better that it's close to impossible to define reality!)
Sure enough, financial institutions (banks, brokerages, mortgage companies etc.) are there only with one thing in mind: profit. They'll try to extract it from whatever they do.They couldn't care less about all those political promises of affordable housing. Left unchecked, this drive for profit ( or "greed" as per Gordon Gecco, the famous character of Michael Douglas from "Wall Street") can wreck a havoc on everyone and everything.
Now, the borrowers' part: their greed, it seems , was in trying to obtain what they could not possibly have. It was hard to comprehend how a lady, a truck driver, interviewed for this program, was realistically planning to afford a 6-bedroom house for $180,000 when our family with 2 relatively high income earners couldn't afford an apartment for more than $280,000( on the emotional level, I sympathize people like her) Now her house is in foreclosure, and , obviously , there was no equity in that house, and the bank has to take losses when they auctioned off her house. So the people left holding the bag at this point, in my view, are this bank's investors (which included our own 401k, our own pension funds and IRA's, so the taxpayer started getting hit at this stage), who took possession of a lot of loans like this, thinking that they're high grade because their rating by those bond insurance agencies.
Now, the fun part: we are now entering the era of socializing the private debt. Institutions like Countrywide are about to collapse without federal government bailing them out for the sake of the "economy at large". So their(now almost worthless) private debt will now become a public debt. Taxpayers, at this point, will get another punch in the form of high taxes-overt and hidden to pay for this debt.
The only people left holding the bag at the end will be taxpayers.
So at the end, we have conspicuous consumerism (desire to possess, "everyone has it so I deserve it, too" etc.) on one hand, and greed of financial institutions who couldn't care less about true interests of their clients, having their interest as the only thing to be considered.
Both of these forces are equally destructive.