I have been frustrated lately by both the extreme lack of understanding and the ideological rantings of people over this current crisis. The idea that personal responsibility and corporate accountability as hallmarks of capitalism still exist is untrue. We have entered into a time of share-holder capitalism and consumer capitalism.
Share-holder capitalism is the running of corporations for the short-term profits of the investors by individuals who work for the investors rather than the company. These people cut back on what makes their companies strong--R&D investment, careful risk analysis, etc, and replace it with concerns on generating high share value. It is a complete disregard for the long-term health of the companies they run that make so many businesses vulnerable at this time of recession even after they survived in many cases for over 100 years. What happened this time was greed and selfishness at its most profligate. People claimed they did not know the crisis was coming but I remember that, when in highschool, I heard about the low credit and expanding home ownership and said "give it a few years, it will all crash." People knew this was coming, they just got caught with their hands in the cookie jar. Additionally, much of the money the people who did escape unscathed made was made through the unproductive buying and selling of houses under the mistaken belief that housing values would continue to rise indefinitely. These individuals to me represent the hallmark of disgusting arrogance and amorality: they broke people and got away with it. The same is true of the presidents of companies who took their venerable firms down doomed paths for personal and share-holder profit. This goes beyond the banking and other financial industry into other sectors as well.
The consumer capitalism is based on consumption to drive economic growth, regardless of the real cost of that consumption and without providing a long-term vision of A) what value the consumer gets from that consumption, and B) the effects of that consumption on the US economy. This has led to the modern situation of dependence on China and other creditor countries for both the cheap goods that finance our consumption and the money with which to buy those goods. This type of capitalism was reinforced when, after September 11, President Bush said that in order to support our country we had to go out and spend. Our supposed "service" to our country through unnecessary, conspicuous consumption is saddening when viewed in relation to the sacrifices that others are making in Iraq, Afghanistan, and elsewhere.
In order to finance our consumption, we took out loans of Chinese money using the so-called "equity" in our houses. No financial advisor would EVER recommend this, and yet we did it out of a "buy now, pay later" view that we could continue to finance a way of life that is no longer sustainable. LISTEN: the vast majority of Americans have not seen a real increase in their wages since the 1970s. WE CANNOT CONTINUE TO LIVE LIKE WE MAKE MORE MONEY TODAY! So yeah, it is our fault as consumers, but it is also our fault as bankers and corporate leaders who should have known better.
During the boom years, deregulation was the mantra of both the right and the center (including Bill Clinton). We cut the controls put on banks and the financial industry from 1929, 1988, and all the other market crash years where our greed and dependence on credit caught up to us. Congress failed to do their job, and we, as ignorant consumers hungry for cheap credit, supported them. My question is this: would you rather have the massive swings we have seen over the past 20 years, or the steady growth (relatively) of a properly regulated market? Things like credit default swaps that helped to fuel this past boom and hurt the most in the bust used to be banned.
And yes, it was the Republicans who removed that ban.
At this point, I acknowledge our faults and that we should be punished for our actions. But how can we when our economy would literally collapse if we were to face the full brunt of the consequinces of our actions? The reason we have to keep our banks bailed out and all that is simply because, if we do not, then small businesses and others who use credit to finance operations would be destroyed along with the 70% or so they represent. What is needed now is actually what I think, and hope, just may be happening. A major reevaluation of what has become a culture where sacrifice and patience are dirty words.