Mailbag; "Sonic" writes: "On Not Connecting the Dots To A Bridge To Nowhere"

On Not Connecting The Dots To A Bridge To Nowhere

By Sonic

Did you know that you learn a lot about political power when you clean your basement? But I am getting ahead of myself; I’ll go back down to the basement in a moment.

Have you noticed that to many of our national politicians, the fall of the sub-prime mortgage market is becoming “old” news, just as the fall of the I35W bridge here in Minneapolis is becoming “old” news to some Minnesotan politicians. The political focus has shifted to “new” legislation, “new” mortgage restructuring, and a “new” I35W bridge.

Unfortunately, to those affected by these colossal and catastrophic events, the reality is ongoing in their daily lives.

Now, back to my basement. So what did I find? It was a two-year old magazine with no centerfold. It was the June 18, 2005 issue of The Economist, a British publication. On its cover was a gold brick, “Housing Prices,” falling from the sky with the title “After the fall.”

In the editorial on page 13, I had marked four passages in yellow highlighter. Here they are: (1) “We have been warning for some time that the price of housing around the globe was rising at an alarming rate. Now that others have noticed as well the day of reckoning is closer at hand. It is not going to be pretty.” [No kidding!], (2) “Two-fifths of all American jobs created since 2001 have been in housing-related sectors such as construction, real-estate leading and broking.” (3) “Ideally the Fed [US Federal Reserve Bank] should have tried to cool the housing boom by raising interest rates sooner and by giving clear verbal warnings to buyers, as Britian’s and Australia’s central bank have done. . . . Of course, by the time America’s prices begin to fall sometime next year, they will not be Mr Greenspan’s headache.” (4) “The housing boom was fun whiles it lasted, but the biggest increase in wealth in history was largely an illusion.”

So, my question from my damp basement last weekend was why, in 2005, didn’t the Washington politicians who make the rules and the regulators who are supposed to connect the dots? The Economist is available everywhere; I suppose I should have passed on my copy to Washington instead of storing it in the basement. Those who make the system rules must be equally responsible and accountable for the system. When they do not act responsibly, the consequences make news as the New York Times wrote in the editorial on Sunday, October 28th: “Until there is an overreaching solution to the coming wave of foreclosures, estimated at 500,000 to 2 million by the end of 2008, individual efforts like Countrywide’s [restructuring mortgages] will be overwhelmed.” I have to end here—I need to run this copy of the Times editorial down to the basement, and wonder if our future is a bridge to no where.