Sub-prime Reasoning
I'm not great economic genius, but every day I read or hear someone say the economic crisis we're afflicted with at the moment is the fault of people taking out mortgages they couldn't afford. This is specious.

The majority of mortgages in all the history of mortgages are unaffordable, and the borrowers do everything they can to make ends meet. I don't blame anyone for wanting a home of their own, even if their reasoning, their calculations, have been flawed. Nobody much was out there explaining the positive balance to be achieved by renting over buying, certainly not to the extent that so many of these people would have had the access to the information or wouldn't still have had that other voice, the bad angel, if you will, whispering just the opposite, something we're all susceptible to, even if it's more a matter of having that extra piece of chocolate cake or not.

And I still don't blame the mortgagees, and certainly not to the tune of trillions of dollars. Sorry, that's where I have to get off this train-wreck of an argument. There are just under 300 million people in the U.S. How many of them would have to take out a mortgage-they-can't-afford to run up the debt into the trillions? Even leaving aside the fact that there aren't 300 million people eligible for a mortgage, even as subprime holders - because many already own, are smart enough to do the math, are children, own in tandem with someone else - you'd need many more than you can comfortably blame for the problem, I'd reckon, but, like I said, I'm no math genius, even if you do give me a calculator.

Not to mention it's money on paper, for one thing, which brings me to where the fault really lies: corporate greed.

It's been a long-standing problem for corporations, private and well as, although especially, publicly-traded, that their focus is not on their existence, but on providing "shareholder return." This can only be accomplished by maximizing profit. Fair enough, that corporations should be in the business of making money, but that's not quite the same as "shareholder return," something that's more about accounting tricks than actual revenue versus cost. There's only so much any company can do to maximize profit, you know. There's a minimum number of employees, after which the company can't fulfill it's commitments to its customers. There are overheads, costs paid to government, suppliers, etc. It takes money, we always hear, to make money, and it's true. But shareholder return doesn't care about that. Show a downturn, show a slow-down, and shareholder return shrinks, the market gets itchy, shareholder return shrinks more, and so on, until you're out of business and shareholder return is zero, anyway, or worse, as we're seeing today.

So Joe Plumber, to take Senator McCain's new icon, loses that home he couldn't afford the mortgage on, even if he was making his payments, because his bank sold his subprime mortgage to someone else who sold futures on it to some other cabal who leveraged whatever that was worth in some other obscene transaction, until somebody had to have some cash and it had to come from Joe Plumber or Joe Sixpack or me or you.

This isn't new, it's just snowballed. We've been headed this way for a few decades now, although things really started getting out of hand in the eighties, when the GOP decided it ought not to be too concerned with how people got along and focussed instead on ensuring they got along so long as they were incorporated. The Democrats haven't helped, frankly, and as much as I hear from back home that Obama is no less in bed with the usual corporate suspects and beholden to the lobbyists, I have to agree. My only hope is that he really will prove to be a leader. I know McCain won't. He's too old and too beholden and too bought-and-sold-out. In some ways, I wonder about Hillary Clinton, but, then again, what did Bill do? I mean other than to set in motion a lot of the regulatory changes that are killing us now.

AU$ down to US$0.65, in a decline as precipitous as it's gain, and during a period where the expectation from the analysts was that we'd be at par. Goes to show: you can't trust the experts. Makes me feel a little better about my own thinking on the topic.