February 22, 2009

Frank Rich: What We Don't Know Will Hurt Us

Posted: 09:39 AM ET

by NY Times columnist Frank Rich

AND so on the 29th day of his presidency, Barack Obama signed the stimulus bill. But the earth did not move. The Dow Jones fell almost 300 points. G.M. and Chrysler together asked taxpayers for another $21.6 billion and announced another 50,000 layoffs. The latest alleged mini-Madoff, R. Allen Stanford, was accused of an $8 billion fraud with 50,000 victims.

“I don’t want to pretend that today marks the end of our economic problems,” the president said on Tuesday at the signing ceremony in Denver. He added, hopefully: “But today does mark the beginning of the end.”

Does it?

No one knows, of course, but a bigger question may be whether we really want to know. One of the most persistent cultural tics of the early 21st century is Americans’ reluctance to absorb, let alone prepare for, bad news. We are plugged into more information sources than anyone could have imagined even 15 years ago. The cruel ambush of 9/11 supposedly “changed everything,” slapping us back to reality. Yet we are constantly shocked, shocked by the foreseeable. Obama’s toughest political problem may not be coping with the increasingly marginalized G.O.P. but with an America-in-denial that must hear warning signs repeatedly, for months and sometimes years, before believing the wolf is actually at the door.

READ MORE of Rich's commentary HERE

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Andrew   February 22nd, 2009 1:32 pm ET

After 15+ years in the mortgage industry I have seen dozens of associates both wholesale and retail and real estate agents go bankrupt and into foreclosure. Not because they took risk or bought more than they could afford, or took out liars loans. But because the companies they worked for are now out of business or the market has tightened so much both purchases and refinances are so far and few between their incomes have dropped 50%. Most cannot replace the income they made for 10+ years and are now tapping out their 401K's and facing the reality that they are going to become a industry statistic. Which just worsens the whole problem?

Not one politician, or part of the stimulus act has addressed this. I guess we are collateral damage. However, I often wonder if we had union backing if the politicians would have jumped to attention to assure our union vote and made some sort of bailout package like the Big 3 got immediately. Using the premise that hundreds of thousands of mortgage and financial workers are facing foreclosure due to the greed fed industry in which the CEO's and CFO's knew would collapse but kept looking the other way till the money ran out then took their bonus for running the company into bankruptcy and then their golden parachute and disappeared.
We are at the tip of the iceberg for foreclosures and the new segment will be "A" paper full doc borrowers who did act responsibly but now cannot earn the same money. It’s no different than the auto workers that I can see except they have the union to plea their case. How could we forecast the value declines and the extreme underwriting guideline changes that would virtually shut down the industry we earned a good living in.
Yet the average American thinks we caused the problem and acted irresponsibly and deserve what may come our way, when all we did was do our jobs as described and demanded by our employers.

Jay   February 22nd, 2009 4:29 pm ET

We won't know when we have hot bottom until months after we are on the upswing. I don't have any more sympathy for former mortgage brokers then I do any one else hurting in this economy. I do believe we as a country should learn that a correct amount of regulation is better then none. I saw Alan Greenspan on a special the other night when he stated he didn't understand derivatives and he had hundreds of highly educated economists on his staff who couldn’t explain them to him. He made one telling comment to the effect that he didn't want to be the one to stop the party. Lots of folks foresaw this housing bubble coming. The ones who could have done something to soften or stop it failed to act. Shame on them. That includes Alan Greenspan.
If your doing a job that in your heart and soul tells you that its wrong you have a moral obligation to get out of that job. I believe there were a lot of mortgage brokers and underwriters who failed to do the moral requirement when they needed to most. Having taking out two mortgages and done two refi’s I only had one mortgage broker who I felt didn’t know enough to properly do his job. He has sent me cards from 5 other places he has worked at since I used him. Obviously they don’t think much of him either. To the few who did the right thing I respect you. To those who's only defense was "it was my job, I was only doing what I was told" you need to read the statements of Nazi's on trial for war crimes and crimes against humanity. They too said "it was my job, I was only doing what I was told". Hopefully after this depression we will return to sanity when it comes to debt, pulling equity out to live on, underwriting of mortgages and believing prosperity lasts forever, it doesn’t.

ed,vancouver canada   February 23rd, 2009 12:42 am ET

What a disaster down there and now it is coming here.
Car sales in canada are down 40-60% depending on brand.We are a huge auto reliant industry.
We lost 129000 jobs in january,2 to 1 per capita to the u.s.
That wilmington story is heart wrenching.Just beyond belief,and your president wants to send more troops.?insanity.
The debt needed to reverse the problem is more than all the reserves in china.
What will happen is that they will not lend any more money,just buy the collapsed economy,piece by piece.

Danny   February 23rd, 2009 12:46 am ET

Every politicians should be required to wear the logos of all their corporate sponsors, just like professional athletes and race car drivers. Mandatory patches ironed on their suits, of every corporate and special interest group they're endorsed by so when they propose or support a bill or policy, it can be known whose interest they're really serving. That's the kind of transparency we need!

eric   February 23rd, 2009 1:41 pm ET


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