Tuesday, September 30, 2008

Obligatory Economic Blog

I've decided that since our economy is catastrophically teetering on the edge of apocalypse not seen since the Great Depression, I'd take a little break from writing about gay stuff and feminism. I'm not an economist so I'm not going to offer any new convoluted theories about this economic meltdown. From what I've read, this domino-like collapse was caused by clusterfuck of people buying houses they couldn't afford, banks approving mortgages that should not have been approved, and people chopping the "risks" of these mortgages up into bits and pieces and selling them to other people for massive amounts of profit.

While this is economic collapse is very frightening, what is interesting is how crises bring out all kinds of theories- theories not motivated to actually get to the bottom of this, but theories obviously motivated to opportunistically use a crisis to promote certain political worldviews. Some people, it seems, obsessively view social catastrophes only through the lens of their political agenda. Thus, as is the case of any other social crisis, the economic meltdown brought another certainty: The knee-jerk blaming of the catastrophe on various social "ills."

For instance:

1. One theory says that our economy is collapsing because political correctness has gone too far! In a nutshell, this theory says that banks were forced to give people of color risky mortgages that they couldn't pay back at the risk of being called "racist." And that caused our crisis.

2. Similarly, according to Ann Coulter, we are in a fiscal crisis because of liberal affirmative action policies. In a nutshell, these policies demanded that lenders give "your" (white people's, I suppose) mortgages to "less qualified minorities." What, other than a crisis, could we expect when Teh Liberals forced banks to give "deadbeat borrowers" mortgages? See, when white people lose their homes it's unfortunate. When people of color lose their homes it's because they're deadbeats. You know, for special, lucky reasons.

3. On that note, have you also heard that Illegal Immigrants have caused this meltdown?! Uh-oh, we better build that fence!

4. More scarily, God has caused the financial crisis because America has sinned! Therefore, we must make God like us again by banning same-sex marriage, banning abortion, funding "family values" groups, and privatizing energy.

Now, I can grant that theories #1 and #2 might have teeny-tiny kernels of truth in them. Those who have defaulted on their mortgages are, disproportionately, low-income people who are also, disproportionately, people of color. But where many of us differ from those with Convervative Goggles is that we won't look at this crisis and think "golly, we better not support programs that encourage home ownership among low-income people" under the belief that doing so would prevent future economic meltdowns. While Ann Coulter uses the situation to spread the message that "Political correctness had already ruined education, sports, science and entertainment... [and now] the financial industry," others look at it through a lens that is not obsessed with demonizing people.

What is lacking from these wack-a-loon theories are other relevant facts. For instance, mortgage companies offered these disproportionately low-income buyers adjustable rate mortgages under the reasoning that after the initial low-interest period, their homes would have increased in value and they could then re-finance if necessary to afford these homes. Meanwhile, if the increase in value never actually happened, it was no skin off the mortgage brokers' backs. It's not their money they're lending. And, by the time a homeowner defaulted on his or her mortgage, the broker had already collected the mortgage fees and was long gone. To the broker, a defaulted mortgage is someone else's problem.

Also adding to the crisis are factors like the decline in housing value and homeowner net worth [PDF] and alleged illegal influence of the mortgage industry to prevent oversight and regulation.

Again, I'm not an expert in economics. But even I know that anyone who is sincerely looking for real solutions will do better than blaming crises on vague concepts like Political Correctness Gone Too Far or God Is Mad At Us or Illegals Are Ruining Everything!

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