The further to the left or the right you move, the more your lens on life distorts.

Thursday, November 27, 2008

Getting a Grip

All of us who have temporarily seen our balance sheets spiral downward have real reason to question the rank stupidity, voracious greed, and total lack of responsible behavior by everyone involved in the sub-prime credit scandal. Whether it’s the California farm worker whose $14,000 per year salary justified a $500,000 delayed interest home loan; the dishonest mortgage broker who gave it to him; the regulators and politicians who looked the other way; the Wall Street investment banker who consolidated that dysfunctional loan with millions of others and sold them to insurance and banking executives who were more interested in year-end bonus than in fiduciary responsibility, we have good reason to condemn them all. As a consequence, many of us have adopted a dark view of the near-term future.

And yet, on this Thanksgiving day, it’s time to take a breath, recognizing that the hysteria fed by 24 hour news cycle does not serve us well. Victor Davis Hanson asks us all to remain calm:
Get a grip. Much of our current panic is psychological, and hyped by instantaneous electronic communications and second-by-second 24-hour news blasts. There has not been a nationwide plague that felled our workers. No earthquake has destroyed American infrastructure. The material United States before the September 2008 financial panic is largely the same as the one after. Once we tighten our belts and pay off the debts run up by Wall Street speculators and millions of borrowers who walked away from what they owed others -- and we can do this in a $13 trillion annual economy -- sanity will return.

Gas, now below $2 a gallon, is still falling, saving Americans hundreds of billions of dollars. As housing prices settle, millions of young Americans will buy homes that just recently were said to be out of reach of a new generation.

If it was once considered a sign of economic robustness that homes doubled in value in just a few years, why is it seen as a disaster that they now sell on the way down for what they did recently on the way up? If we were recently terrified that gas would reach $5 a gallon, why do we now just shrug that it might fall to $1.50?

Unemployment is still below 7 percent; it was around 25 percent when Franklin Roosevelt became president. Less than 20 banks have failed, not the 4,000 that went under in the first part of 1933.

We all wish Barack Obama to succeed as president. But there is no more reason to panic and circumvent the Constitution for his early assumption of office than there was for Bill Clinton to prematurely step aside in November 2000 in favor of then President-elect George Bush.

Our economy will survive. Small businesses will grow into large ones. Young people with ambition, enthusiasm, and intelligence will succeed. And the “American Dream?” Although it’s a bit hobbled at the moment, it’s alive and well. I guess that’s sufficient reason to give thanks.