The economic crisis, hypocrisy, prophecy, and a stupid commercial

The Feast of Tabernacles preparation is dominating my time these days, so I am not coming across much time to blog.  However, it has been hard to hold back concerning all of this “economic salvaging” talk going on.

I find the ongoing drama fascinating, but only in the way that one driving by a train wreck finds the scene outside the car fascinating.  I find it fascinating how those politicians who pressed and pressed and pressed for years — even until very recently — that folks with bad credit should be given loans for homes are now complaining about the mess they helped create.  Last night I heard audio recording just a few years old of several “big name” politicians in session working to prevent the government from tightening its regulation of Fannie Mae and Freddie Mac — even arguing that the standards be lowered for those organizations — and defending the outrageous bonuses reaped by Fannie and Freddie’s executives, and now those same politicians are the ones I see on TV lamenting that regulations were too lax and that executives are profiting too much.  Unbelievable.  On the other side of the aisle, I see the same politicians who were bragging a few years ago about the financial boom America was experiencing due to their approach and policies now wringing their hands at a problem whose existence is just as related to their approach and policies as the supposed boom was.

Everyone in both parties is so busy pointing fingers at the others while conveniently forgetting (at least publicly) his or her own sordid role in causing the current mess.  How these guys and gals look at themselves in the mirror each morning, I have no idea.

And while pointing out corporate greed is quite popular these days (though various, critical shades of it didn’t seem to be a problem to either party just a few years ago), no one seems to have the nerve to tell the American public that our citizens’ willingness to borrow insanely themselves — agreeing to mortgages of 110% of the value of their homes, for example — is a part of the problem.  Perhaps partly because our politicians want those debt-addicted voters to like them all come election day, and also, perhaps, partly because the American economy now depends on the willingness of the debt-laden, materialistic American citizen to become even more debt-laden and materialistic.

All of this brings to mind one of the most vomitous commercials I can recall from just a few years ago — actually, our last few years in Texas, I think.  It pictured a wife trying to explain to her husband (of course, it would show a woman instructing her husband; the other direction just isn’t kosher on TV) about the wonderful options now open to them by allowing them to borrow on their home equity.

Some of you may remember it, too.  It started with the wife holding a clear pitcher of water, and saying to the husband (something like), “This is our home equity.”  Then she gets several clear glasses and begins to fill them with the water from the pitcher, saying with one glass, “This is our daughter’s college tuition,” then moving to another glass, “This is the vacation we’ve been wanting,” etc.  The husband’s eyes brighten, “Duh, yeah!” as he catches the materialistic “vision.”  OK, he didn’t say, “Duh,” but you get the point.

INSTEAD, why couldn’t the husband have responded, “Well, honey, how did that water get into that pitcher in the first place?  Have you thought of that?  You know, now that you’ve filled up all of these glasses, I can’t help but notice that we now have an empty pitcher.  How are we going to fill that pitcher again?”  He would have done his family a lot of good and given his wife an important education.  I would have paid good money to see that commercial.

The pitcher commercial was probably effective (it certainly played a lot), but in my mind it was disgusting and deceptive.  Regrettably, it reflected the reality around us, and now we are a country left with an empty pitcher.

The Scriptures prophesy of America facing problematic debt in the end times — and not just debt, but debt to foreign nations (Deuteronomy 28:43-44, et al.).  They also point to a disasterous lack of leadership in the end times, as well (Isaiah 3:1-3, Ezekiel 22:30, et al.).  If you don’t see shades of these prophecies in today’s headlines and news clips, I would say you aren’t really looking.

11 thoughts on “The economic crisis, hypocrisy, prophecy, and a stupid commercial

  1. Carolyn

    Speaking of all the commercials that push credit at you, how about all the “junk”mail from all these creditors. It seems if they put a stop to that alone and put the money that is spent towards the paper, stamps, garbage(to get rid of the unwanted stuff) instead put it into this crisis, it seems it would put a big whole it what is needed to “bail out” of their financial woes. Just a thought anyway…

  2. Wow, Kurt. If you think the above could have been written by a Democrat, then you have no idea who had been coddling Fannie Mae & Freddie Mac’s excesses and preventing them from being regulated better over the last few years. I know it may hurt for you to admit it, but it was the Democrats, not the Republicans.

    Search for “Fannie Mae” on YouTube — it might be an education for you! Watch the arguments come out of their own mouths. The clips of Rep. Frank are particularly (though, sadly) hilarious in light what what we now to be the truth, and seeing him on the news these days talking about fixing a problem that he played a crucial role in creating and perpetuating is a real head shaker. If you were to take those video clips and remove the names and faces, and then imagine who was speaking based on the rhetoric coming out from Washington today, you would think the parties are reversed. Amazing. There is only one rule for “who to blame” if you are a politician: blame the other guy.

    Yet, the Republican party is just as guilty. When Republicans were handily in control and more and more Americans were buying homes, they were quick to take credit for our “remarkable” economy. Yet, isn’t part and parcel of the problem today the fact that many of these people could not afford the homes they were buying? And the idea that debt is not that big a deal if we compare it to the GDP? Is that still being given any credibility?

    No, both parties have contributed in their own special ways to the mess that we are now in. And not understanding Proverbs 22:7 is just one big part of why. America continues to look to her own smarts and to her foreign lovers (financiers) and not to the God who made her what she is. Unless the foundation of the solution is built on changing that, then expect no real long-term solution to do the trick.

  3. Deano

    Howdy Mr. Smith,

    I hope you are having a great Feast of Trumpets and Fall Holy Day Season, generally.

    I don’t watch television too much these days, so I miss out on all the good stuff that’s on there. But I have pretty much always hated commercials, so even when I did watch a lot of TV I didn’t watch the commercials, thanks to the lovely, lovely mute button 🙂

    I do get lots of pre-approved credit card offers, though, and I have to wonder if greed is intoxicating in some way. It’s like they can’t really even grasp the situation – even when they are drowning in it.

    Am I seeing that correctly?

  4. Another commercial comes to my mind right now. The Ditech ad on cable news — where the guy proclaims, “I’m in debt up to my eyeballs!”

    Sad, but true.

  5. At least the commerical was honest in showing how home equity loans work. …or did they carefully crop the empty picture?

    A coworker mentioned that he had a friend who’d skip lunch to pay his cable bill.

  6. Thomas

    Hi Mr. Smith,
    you may be interested to know that down here in New Zealand one of our news journalists, John Campbell, interviewed Bethany McLean on the current financial crisis. Bethany McLean is famous for being the American journalist who blew the whistle on the Enron scandel and writing the book “Enron, the Smartest Guys in the Room”.
    She was quite frank in her assessment of the greed that has landed America in this situation, saying that for years many people had mistaken a bull market for their own brains and had paid themselves accordingly (which rings true, as how many have mistaken God’s blessings as their own accomplishments?). She said that she found the current crisis embarrassing for the financial sector and embarrassing for her country.
    In an attempt to end the interview on a lighter note, John Campbell put to her that at some level as someone who watches and comments on these events it must just seem farcical (re the political blame game and Bush’s proposed bailout). Bethany McLean acknowledged that it would, but tellingly she ended by saying that she was frankly scared as to what the future now holds in a way she has never been scared before, and she does not know anyone among her colleagues who isn’t.
    For those interested the interview can be watched at: http://www.3news.co.nz/TVShows/CampbellLive/Stories/tabid/817/articleID/74057/cat/84/Default.aspx

    (Sorry for the long post).

  7. Aaron

    Kurt and others,

    Take a look at the Community Reinvestment Act. This was first signed into law by President Carter in 1977, and it required banks to lend to residents of all neighborhoods. Previously banks had excluded residents of poorer neighborhoods from consideration for loans – a practice known as “redlining” – as a first screen for credit worthiness. While it may not be a perfect method, it’s understandable what they were trying to to do.

    Fast forward to 1989, just after the savings and loan crisis. President G.H.W. Bush expanded the law to include a rating system for banks – accomplished by the Financial Institutions Reform Recovery and Enforcement Act.

    Things were largely okay until this law was expanded on by President Clinton in 1995. The revised law REQUIRED banks to lend to residents of all neighborhoods – not just consider them. Banks were measured based on how often and how much they were willing to lend to various groups – classified by neighborhood, income, and race. This became a public relations issue, and was championed as the road to home-ownership by “underprivileged minorities.” What it really did was encourage (and enforce) poor lending practices to people who did not have the means to purchase a home.

    Fannie Mae and Freddie Mac, perceived (correctly) by the market as government-backed, carried great influence among the banking industry. When they asked for more mortgages, the banks obliged, knowing the repackaged securities were 100% packed by the government through Fannie and Freddie.

    Countrywide was one of the institutions which really took the bait on this, and was praised as a “paragon” of non-discriminatory lending. Really, they were just making bad loans to people with bad credit and lending too much. Long-established rules went out the window. No longer did one need 20% down. No longer did the monthly payment have to be less than 25% of their monthly income.

    Think about it. Would you lend money to someone if you seriously doubted their ability to repay you? The leaders of the banking industry are not dumb about this either; their answer to this question would be the same as yours. They would not be willing to lend money to people with credit problems unless an incentive was provided in order to compensate them for the additional risk. Higher interest rates are one means, but are not sufficient in this case. It took government to encourage these horrible lending practices.

    In spite of all the corruption in high places, this entire crisis could have been averted if the average American had a little more financial intelligence. Spend within your means and avoid debt. Those entities which have failed in this crisis – both individual and corporate – were highly over-leveraged. Have cash on hand; pay with cash; avoid debt.

    I’ll get off the soapbox now.

    -Aaron

  8. No apology needed, Thomas, and thanks for the history lesson, Aaron!

    As an actuary studying the glorious realm of investments and the very mortgage-backed securities that are now the focus of such discussion, I can attest that it has always been assumed that Freddie Mac and Fannie Mae would be backed up by the U.S. government should something go wrong — not 100% risk free, but essentially so.

    Regardless of how one feels about such Government Sponsored Entities (or GSEs), one can hardly doubt that they were poorly managed and became sources of graft, irrational profit taking, and excessive executive compensation, as many took advantage of their “best of both worlds” existence. Those associated with them enjoyed the lifestyle normally earned only by hardcore risk takers while enjoying a “risk free” atmosphere (the benefits of risk without the dangers of risk — should have been a red flag!).

    Thanks, again, for bringing everyone up to speed! Many people spend too much time listening to current accusations as opposed to looking at the history to see if those accusations match the facts.

  9. What’s your heart rate during exercise? Skimming the headlines at wnd.com is enough to raise ones heart rate.

    I consider watching the verbiage coming out of Washington live a waste of time. They use to many words to say so little. I’ll look for a transcript to skim if I’m interested, or look for commentary from my favorite commentators. Aaron’s concise history is an efficient time saver. It also supports my belief that this problem is the government’s fault.

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