The Blame Game

On Wall Street and Capitol Hill there seems only one game to play these days: The blame game. If only Sony or Nintendo could have come up with that idea, their share holders would have been delighted.

Since the swing has left the swagger in a sordid heap of despair, all along Wall Street and Main Street and about every street where you live fingers are pointing and daggers are being drawn. The executives blame the traders for their fantastically bogus financial instruments. The debt-stricken home owners blame the lenders; greedy shareholders and fat cat executives. The law-makers hold their heads and blame the credit rating agencies; traders; mortgage brokers; executives and everything else within range.

But no one blames the root of the problem: The borrowers. Dubious mortgage contracts would have no effect if no one signed them. Traders would not cause havoc with wizard's instruments if there were no stack of bad debt rolled up in those instruments. Fat cat executives would not crash the financial system purely on their extravagant bonuses were it not for the bad debt foundation of their businesses.

Perhaps it is not politically profitable to put the root blame at the feet of the individual borrower. After all, it the sub-prime borrower who appears now with a sad face in every interview vaguely interested in their sad story of naivety and deceit. Yes, it is that sad face who will cast a vote in November for the top job: US President. Right, so we are to believe the soap opera of suburbia. Well not all of us, one has to say.

According to Bloomberg.com, $523.1 billion has been written down over the past year due to collapsing sub-prime mortgages. That staggering amount was borrowed by individuals who had bad debt in the first place. Each one of those borrowers went out to buy a house on a history of bad debt. It means each borrower bought more than could be paid back on what income was available. On top of that spree, the borrower felt entitled to buy a home on mortgage under the circumstances. That decision appears purely irresponsible if not downright reckless. But it also smacks of self-indulgence.

Perhaps the American Dream has gone too far. The connection with reality has been lost. Unfortunately, reality has a cruel way of reinstating itself, often with a vengeance as in the current financial crisis. So instead of spend, let us save. Instead of consume, let us conserve. Smarter, rather than bigger, is better. And let instant gratification remain behind in the cradle with the dummy and the baby's bottle.