Archive for January, 2010
I don’t want to be snotty or anything here, but “life, liberty and the pursuit of happiness” is not in the US Constitution.
It’s in the Declaration of Independence.
And I think all it’s supposed to mean is that citizens get to set their own priorities without interference from the state–that the state shouldn’t get to tell you you have to be a Methodist and not a Catholic, a carpenter and not a brain surgeon, a vegetarian and not a meat eater.
They used to define “happiness” differently than we do. We tend to mean by it an emotion. They tended to mean by it something like a state of intellectual satisfaction–a knowledge that your life was properly ordered and being lived in accordance with virtue.
I sometimes think it’s remarkable that somebody like Jefferson–who, for all his radicalism, was not a moral relativist–could have come up with the idea that the state should not impose virtue on its citizens, but allow them to live out their own conception of it as long as it did not breach the peace.
I sometimes run into people on the net triumphantly proclaiming that the US was not founded on the idea of natural rights but on the idea of protection of property owners, because after all, the original formula, Locke’s formula, was that people had the right to “life, liberty and property.”
But Jefferson changed the formula, and he was right–and considerably more right than you could expect him to be, given his personal circumstances.
The usual formula I learned in school was that Jefferson was a great man but not a good one, and Adams was a good man but not a great one.
But I think that the entire situation at the start of the US is a direct challenge to the idea that we are all held hostage (in our ideas) to our circumstances, that all argument about morals and politics is necessarily self-serving.
And I come back, you know, to the feeling that these guys were the intellectuals of their time. The American revolution was conceived and ordered by men with what we know call “classical educations”–with the knowledge of Cicero (LOTS of Cicro) and Scipio as well as the Bible.
And yes, of course, the revolution only actually happened because these men were speaking for and to a broader range of men with less in the way of education.
But if that broader range of men had turned their backs on Jefferson and Madison and Adams and Washington as a bunch of “elitists” who couldn’t talk to the “folks”–we’d still be singing “God Save The Queen.”
I’ll stipulate right now that people like Chomsky are not what we’re looking for, but neither are people who scream “elitist” every time somebody else references Aristotle or uses a polysyllabic word.
When Jefferson started the University of Virginia, he was certainly interested in the “useful arts,” but among the arts he found useful was a working knowledge of Latin and Greek authors, in philosophy as well as history. He wanted a country not of philosopher kings, but of philosopher farmers.
You can tell I’ve started teaching again. I’m in that mood.
And I’m going to go off and listen to elitist music, with harpsichords in it.
So, I’m sitting here at a halfway decent computer–not one of the really great ones, but better than anything I have at home–and the first thing that comes into my head is this: is it possible to teach people to be happy?
Traditionally, this was the great question for philosophy and religion, and there’s a lot out there from classical Greece and Rome that addresses it particularly. It interests me, though, that when you look at classical writing on happiness, it almost never addresses what sometimes feels to me to be the human drive to be unhappy. I could count for half an hour the number of people I know who seem almost dedicated to being miserable.
Rather, classical writing on happiness, the philosophies of everybody from Plato and Aristotle down to just before Augustine, assumed that people wanted to be happy, but were kept from being so by one circumstance or the other. There was so much chance and circumstance out there, endless wars, the scheming of other people.
Christianity, at least from the time of Augustine, tended to be more cognizant of the fact that some people either don’t want to be happy, or can’t be made happy by any of the usual means. Most of us have known rich, talented people who either never have enough or who don’t recognize what they do have.
There’s another kind of person, though, who seems to love to wallow in misery, and, more than that, to intrude upon anybody in the vicinity to make sure they acknowledge that misery. If you ever speak before groups, you know these people on sight. They’re sitting in the first row, or not far back, with their arms clasped around their torsos and and mulish looks on their faces. As soon as you open the floor to questions, they’ve got complaints.
A friend of mine says that I should not count such people as unhappy, because they’re actually just overjoyed in their unhappiness. They love what they do and they way they do it.
There are unhappy people in the world, though, and it often seems as if there are more unhappy people when the world in question is relatively well off. Augustine would have said that our true desire is to see the face of God, even if we don’t know it, and that anything else will always seem to us to be unsatisfactory.
Modern psychology seems to treat unhappiness as a disease, which we should be medicated out of. And the assumption seems to be that “normal” equals “happy,” so that even long-recognized human responses (say, tending to get depressed in the dead of winter) become “disorders” we need a prescription for.
This sort of thing is often urged along by modern biochemistry, which assumes that all our emotions are chemical reactions in the brain. On that score, the prescriptions sound like a good idea. At least they address the “root cause” of the problem.
More and more, though, I think that happiness is a decision. That it’s not about giddiness or euphoria–which are biochemical responses in the brain–but about coming to some kind of resting place.
Blech. I’m describing this badly. Maybe I just mean it’s about developing a sense of proportion, about knowing that although things may not be perfect in 21st century America, they beat 99% of everything else I can think of. I’m not fond of Glenn Beck or Noam Chomsky or Lady Gaga, but I’d rather have all of them in a room than be stuck with Torquemada.
Maybe I just know that, being who I am, and who I honestly want to be, there isn’t any society anywhere, in actuality or in theory, that would have made me the most successful person on the planet.
Maybe it’s just that that’s all right with me.
I told you I was feeling scattered.
I don’t know why, but I’m really having a lot of trouble getting over this particular novel–no, not getting over the novel, exactly, but getting over the weird physical side effects of writing.
I have no idea if this is something every writer, or even every writer of fiction, experiences. When writers get together, they don’t talk a lot about writing. Money, now, they talk about money. But. Ahem.
Anyway, for me, writing a novel is a little like taking speed. But only a little. It’s not just that I’m revved up, but that I’m in a brain zone that is very unlike myself in the everyday. One of the reasons I tend to read only fiction during the time when I’m seriously concentrating on writing fiction is that during that time I have a lot of difficulty focusing on anything else–hell, I have a lot of difficulty focussing on other people’s fiction.
I’m usually a read-a-big-book kind of person. I like whole books, and I like them long, fiction and nonfiction both. When I’m writing, though, I’m either unable to concentrate on any sustained line of thought, or I am able, and my own book is going badly. So while I write novels, I read short stories or, if I have to have real life, magazine articles. And I mean short magazine articles. Anything above, say, twelve hundred words, and my mind wanders.
At the moment, I’m working my way through a Christmas present, called Too Big To Fail, by Andrew Ross Sorkin–an extended (very extended, it’s a long book) look at the meltdown that led to the financial collapse of last year.
And there are some interesting things in it that would remain interesting even if all the money angst didn’t interest me intrinsically. Some of the people are fascinating as examples of psychological something or the other. I don’t mean that they’re unusual types, only that in some cases I was surprised at finding some types in some places.
There is, for instance, the acting head of Lehman Brothers, a venerable investment bank and one of the iconic Wall Street brands of my childhood (along with Merrill Lynch, who’s next up in the book)–anyway, I find it difficult to believe that a man could have had a career that long and varied without anybody ever noticing that he was absolutely useless in a crisis. The guy responded to the implosion of his firm the way my younger son responds to thinking he’s about to get a bad grade–anxiety all over the landscape, unable to shut up, unable to control his impulses to jump in and make things worse, unable to think straight.
A lot of us are like that. It’s not an unusual trait. I just can’t believe somebody who is like that ended up heading one of the largest and most important investment banks in the world.
But although that kind of thing is interesting in itself, and although I’m interested in the general subject matter of the book, I find I’m having a hard time keeping my mind on it when I’m reading. I wander off into the kind of thinking I usually only indulge in when I have nothing else to think about–having mental fights with people that are better than the ones I actually had because now I know what I wish I said; calculating the bills for the next month; singing country songs I vaguely heard once a couple of months ago and thought I had successfully gotten out of my head.
Sometimes this sort of thing happens because the book I’ve been writing managed to create a world I’d rather live in than the one I live in now. That was not the case in this book, although a lot of it takes place on Cavanaugh Street. Things on Cavanaugh Street are moving in a few new directions, and I was laying the foundations for that.
Maybe it’s just a matter of this last push at the end having been so heavy-duty and so panicked. I do think the book I just handed in is infinitely superior to what the book was when I first handed it in. I also tend to pace myself with writing, because I don’t like panics. Maybe it’s that I know I have a few corrections to do–although, next to the fourteen page editorial letter my editor sent me about the original version, the few changes he wants in this one are chocolate cake.
Maybe I should take Robert’s advice and do a little more self-promotion. He hadn’t realized I wrote short stories, and I actually write a lot of them, although they’re not much like the books I write. They tend to be both incredibly dark and incredibly bloody.
But I always feel uncomfortable with blogs that are all about a write pushing his latest thing in print–look here! I wrote this book! Buy this book! This book is good!
Maybe it’s just that I always feel uncomfortable with self-promotion. I also tend not to get out into public much. You pretty much have to drag me kicking and screaming.
Every once in a while, my favorite reality show obsession, America’s Next Top Model, has a thing where the girls are asked who most deserves to win the competition, or who has the most potential, and all but one of them picks herself. Then the one that doesn’t gets lectured by the judges on how wrong it was for her to pick somebody else.
But if it were me, I’d pick somebody else–because ingrained in the back of my head is the idea that it’s just rude to vote for yourself right out there in public like that.
I’ll admit I have the same feeling about people who vote for themselves in private, like when they’re running for things, but I do recognize that that’s a little odd.
Well, okay, not opening day. It’s been about a week now. But things are off to a roaring start. Consider, for instance, the text of this e-mail, which I received from a student:
>>>I am a student in your class… I been going to tha class .. So I jus wanna kno can you please email me any homework or miss work so I can get caught up …. thank you …..
I’m not making that up. The only change I made was to take out the name of the sender. That’s a college freshman, at least.
I’m going to go back to a theme, and I understand I’m getting repetitive. The fact that somebody has passed a course in something tells me nothing at all about whether that person has mastered the skills or the material theoretically taught in that course.
It doesn’t tell me how good her teacher was, either, because I am increasingly of the opinion that although there are plenty of bad teachers, there are even more bad students, and the best teacher in the world cannot overcome the drive of a bad student not to learn.
I still say that what bugs me about all of this is the fact that we accept the passing of a course–or a course of study–as “proof” that people are “qualified” to do all kinds of things. For most areas of work and further education, we don’t even do anything to double check. The law has the bar exam. Doctors have med boards. Accounting has a general exam as well. Everybody else, we just send out and let them hang. Or let them hang us.
I’m beginning more and more to think that Charles Murray is right about this–we should abandon our reliance on schools and place the burden of “proving” that our applicants know something on general tests that probe for the specific skills involved. Instead of inisting that everybody take a class in English compeition, there should be a test in English composition that anybody can take and pass or fail as they are capable. And if they can pass without having to sit for long boring hours in a classroom with a teacher who writes less well than they do–well, good for them.
Sometimes I feel that the trend in the world in my lifetime has been the institutionalizing of everything–we more and more seem to rely on large institutions to do all our work for us. I don’t mean taking out the garbage or doing the wash, but making decisions about the human beings we deal with and their ability to do the things we want them to do.
When I was growing up, boys learned to fix cars by tinkering with old ones in their own garages, then by getting jobs in gas stations and watching while guys who did it for a living taught them what to do. Now we’ve got “associates degree programs” in auto mechanics at the local community college. I trust the guys who learned in their garages a lot more than I trust the ones toting around paper credentials saying they know where my carburetor is. And I know I probably just spelled that wrong.
I’ve always thought that our rage for paper credentials had a lot to do with our attempts to be sure that we are not rejecting people for the wrong reasons–that we are not engaging in racial or sexual discrimination, for instance–but it seems to me that the credentials mania is actually making us less knowledgable rather than more, and less competent at all kinds of things.
And the reality of that shows more strongly every day.
So it seems to me that it can only be a matter of time before it all collapses.
I just wish I could see it coming next week instead of next decade.
Okay, a couple of notes, on things I noticed and couldn’t pay attention to as I was writing.
First–has Rush Limbaugh lost his mind? I mean, okay, he hasn’t seemed really well wrapped for a while now…but don’t contribute to the White House Haiti relief fund because they’re just going to collect your e-mail information and…and do what with it? I never did figure that story out. At all.
Second–at what point do we get past the assumption that people who does things have a way they should look? I’m putting this badly. But look at it this way, there’s nothing about writing poetry that says you have to look good to do it. In fact, many poets over the years have been ugly as sin, or just not very charismatic in person. But during the Romantic period, when poets were their eras version of rock stars, all the biggest poets looked like…rock stars. When did that change? And when will it change for rock stars?
Third–when did the whole world start to be about school? Or is that just me, where I’ve got kids in school and I’m teaching? But sometimes it seems that if it isn’t school itself, then it’s a school mentality–all that constant talk about ‘assessments,’ for instance–everywhere, in everything.
Fourth–I was right in the middle of frothing at the mouth over the biased essays contained in a new textbook we’re using when I started looking through Andrew Ross Sorkin’s Too Big To Fail. This may sound unrelated, except that the last essay I read in the textbook was all about how class is destiny in America and there’s no real social mobility here (and boy, did that require a lot of tendentious reasoning), and To Big To Fail is full of portraits of the main players in American finance, almost all of whom seem to have grown up working or lower middle class.
Fifth–I actually thought the nude model thing in the Scott Brown/Martha Coakley race was sort of interesting. If it had been a Democrat running with that in his background, Sean Hannity would have gone into paroxysms of outrage. And to be fair, Glenn Beck did go into paroxysms of outrage. But still. We’ve reached an interesting stage–and not necessarily a bad one–when somebody can have that in his background and still get elected.
Sixth–I finally realized that I no longer have a list of books I would take to me to be stranded on a deserted island. Or rather, I’d either get to take ALL the books, plus regular infusions from Barnes and Noble and Amazon, or I’d go crazy. I don’t seem to have books that I just love to pieces and that could satisfy me even if Ihad nothing else, at least not any more.
Seventh–there is simply not enough news actually happening in the world to justify even one twenty-four seven cable news network. News on the cable networks is beginning to resemble network sports reporting. People sit around and blither endlessly about nothing having happened in the latest “important” story. They repeat the obvious. Over and over and over again. They “speculate” in sepulchral tones over. whatever. Poodle hairstyles. The look President Obama had on his face when he was playing golf. What It All Really Means. If they actually knew the answer to that one, it might be interesting.
Eighth–okay, the upset in Massachusetts was interesting, but it was just one race. And, on top of that, the national news outlets all completely ignroed any possible local considerations in the election. I’m not the only one who is repulsed by Coakley for her position and her actions on the Amirault case. Howver that may be, however, I will absolutely guarantee you, the ascension of Scott Brown to the United States Senate has not ended the world as we know it.
Ninth–why is it that my only choice of movies lately is either some superhero action picture of Everybody Sitting Around Feeling Depressed and Morally Compromised? Didn’t there used to be…you know… movies? Okay, if you want one, there’s a thing called Shortcut to Happiness, with Alec Baldwin and Dan Ackroyd, that’s really very good. But it’s from years ago and didn’t do all that well in theaters.
Tenth–the choice of genre is the choice of audience. When you decide to write a mystery instead of a mainstream novel, or a western instead of a romance, you’re making a decision about who you’re talking to as much as about what you’re talking about. And a lot of people who would not read a book about, say, the problems in a dying rustbelt post-industrial city will read one if it has a murder in it. If you see what I mean.
I’ll get more coherent as the days go on. I promise.
Okay, that doesn’t have to do with anything. It’s just my favorite new thing I learned–the actuality is quite dry (it means people who short stocks without having first borrowed the stocks to be in physical possession of them–something that’s illegal, by the way).
But I just like the term. It reminds me of things having to do with boxers.
Anyway. Here’s a quandry, and I’ve got a couple of them these days.
First, in regard to the election of Scott Brown in Massachusetts on Tuesday night. I’m no longer a registered Democrat, but I vote Democratic all the time, I’m in favor of a single payer universal health system, and I was also in favor of a Democrat in that seat so that the US Congress might get at least some of the health care reforms passed.
The problem is, I wasn’t in favor of Martha Coakley.
Not even a little.
For me, Martha Coakley is way too well connected to the Fells Acre day care child abuse case.
In case you don’t know about that one, it was one of several prosecuted during a sort of witch-hunt hysteria about child abuse in the late Eighties. And it was notorious, in no time flat, for the number of absurd charges that were brought with no physical evidence whatsoever against three memebers of the family that ran the center.
When the children were originally asked if anybody had done anything “bad” to them, they all denied it. It was only after they had been placed in the room with a psychologist who would not let them see their parents until they “just told what happened”–and were kept in that room for hours–that any accusations of abuse were heard.
And the accusations were ridiculous. Supposedly, there was a rape with a butcher knife–but no such wounds were found on any child, there was no blood, there was no butcher knife. People were accused–and later convicted–of commiting acts of abuse during periods of time when they could demonstrate that they were not in the area where the abuse theoretically occured. There were bizarre accusations of things that supposedly occurred in public that somehow nobody ever saw.
There’s an interesting article on Coakley’s behavior as the Massachusetts attorney general and her involvement in the Fells Acre mess here:
I can’t vouch for the site, since I don’t know it, but the information in the article fits what I knew before.
Coakley didn’t prosecute the Fells Acre case, but when it became so clear to virtually everybody in the state of Massachusetts that not only had the Amiraults not committed any abuse, but no abuse had ever occurred in the first place, that the Board of Pardons and Parole recommended that the last Amirault in jail be let out immediately, Coakley fought tooth and nail to keep him locked up and refused to listen to any of the evidence that exculpated him.
I wouldn’t vote for Coakley to save my life. In fact, I think it’s a pretty good bet that keeping people like Coakley out of office is a prerequisite to saving my life. The Fells Acre case makes the case against the Duke Lacrosse players look fair, and that one was deliberate fraud.
I found it hard–in fact impossible–to take seriously the claim that one of the reasons we wanted Coakley in the Senate instead of Brown was that she cared about human rights and Brown, well, was a Republican. Coakley’s record makes me think she cares not a whit about rights of any kind.
Hell, it makes me think she cares not a whit about linear thought.
I have no idea why, but I am more and more getting into these kinds of messes–where the candidate I should want to vote for (because of stands on issues, say, or affiliation with ideas or groups I favor) runs smack into the wall of that candidate’s individual behavior.
If I’d been living in Massachusetts through this, I would have wanted to vote for the Democrat, but I wouldn’t have touched Martha Coakley.
It works the other way around, too. One of the people running for the Senate in Connecticut next time, to fill the seat of Chris Dodd, who is retiring, will be the state’s attorney general, Richard Blumenthal. Blumenthal is far to the left of me, and I don’t like a lot of his political positions on a lot of things.
But when Bill was dying, people in Blumenthal’s office helped me with information and in other ways when our insurance company tried to reject his proposed liver transplant, something that, if it had come in time, might have given us another ten or fifteen years.
That is not a small thing, and I owe the guy’s staff and the guy.
So–do I vote for him or not? And in the case of somebody like Coakley, given that dilemma, should I vote for the party and “hold my nose,” as the saying goes, for the person?
I’m sure I’m wrong to think, as I can’t help doing, that this used to be easier. That when I was younger, it was more often the case that I respected the person when I liked the politics.
It’s more likely that I didn’t know as much as I do now, and wasn’t paying as much attention.
Whatever it is, though, it’s depressing.
I’m going to get off on a little tangent today, and I’ve got no idea if I spelled that correctly.
But the term has just about started, and I’m about ready to explode.
First, you have to understand that I don’t teach to make a living. My actual full time job, and the one that pays me the significant part of my income, is the writing I do, both the books and the magazines I sometimes work for, and the things that come out of that work, like the occasional speaking engagement.
I started teaching about ten years ago on a part time basis mostly in order to get out of the house and have people to talk to. Bill had died, and I had two young children. I was living out in the middle of nowhere. I almost never got to talk to adults. My friends and my work life was in New York, and New York was not around the corner.
The place I chose to teach at was a small institution close to where I live, where I knew people on the faculty. It was, and is, also a place that admits many students from what can only be called “low performing high schools”–meaning high schools that don’t teach their students much. Some of these students are local, and some come from fairly far away. There’s a significant population out of inner city New York City, and especially from schools around Crown Point.
Even when I originally started teaching there, this was probably the worst gig in the area–it pays literally half of what I could get at the local community college, for instance, and the student population is (as I’ve noted here several times) deeply depressing.
I think my idea, when I started, was that I could be of use to the students who walked into my classroom. It’s very rare that somebody with my credentials is willing to teach in a place like this, never mind somebody with my publishing record.
A couple of years ago, however, this school was taken over by a group of people that changed it from a nonprofit to a for-profit institution, and with that change came a number of other changes that have been driving me completely nuts.
One of those changes has been in the approach to the students. We’re putting enormous pressure on retention, and because of that there’s also enormous pressure to get people to pass. This has resulted in policies towards things like student attendance and late assignments, so that we now approach college students in a way that I would find excessively restrictive in high school.
But the biggest difference has been in the policies pertaining to adjuncts–and this place is virtually all adjuncts. There was, last I checked, exactly one full time member of the English department in a small university that probably runs twenty English course sections a term.
The first indication that things were going very wrong had to do with a copier, of all things, on the second floor of the building where most English classes were held. One morning,we all got e-mails telling us that the passwords for that copier had been changed, that it was to be used by full time faculty only, and that adjuncts should walk halfway across campus to the library if there was anything they wanted to copy.
It was the kind of petty crap that drives me right up the wall, but it was petty crap, and I thought I had a good idea of who was probably behind it, so I wrote it off as adolescent bullying and got back to work.
The petty crap kept coming, though, and after a while it was no longer so petty.
First was the supplies issue–full time faculty could get supplies from the school, but adjunct faculty were required to buy their own. Grade books, markers, smart markers for use on the white boards, pens, paper, paperclips–if you’re here full time, the college gives them to you, if you work here part time and need something, tough luck. Pay for it yourself.
Second are the services–not only are adjuncts restricted to a single copier in an inconvenient location, but only full time faculty can get their copies made by the university copy department. If you have a lot of big jobs to do that the library copier can’t handle, and you’re part time–well, better head for Staples and pay for it yourself, because that’s the only way it’s going to get done.
Third was the situation with parking. There had always been some spaces in the faculty parking lot that were reserved for particular full time faculty, but now virtually all of them were so marked off, and the college began to threaten that anybody else in “full time” spaces would get towed.
This is a bigger thing than you’d think, because there really aren’t any other lots close to where English adjuncts teach, and most of them are student lots which require a good long hike to campus.
But the kicker came at the start of this term. From now on, adjunct faculty–but not full time faculty–most agree to an “investigative credit background check,” and in doing so sign away the right to sue or otherwise bring a complaint for the way that information is used.
It’s not the background check in itself that bothers me. It’s the fact that it’s ONLY applied to adjunct faculty.
Now, the simple facts of the matter are this:
First, I’ve got significantly better credentials than most of the people who work here full time.
Second, I can get paid better virtually anywhere else in the area.
And third, NO OTHER PLACE makes these kinds of distinctions between full time and adjunct faculty. At both our local community college and the branch of our state university and the two other small colleges near here, any kind of faculty parks anywhere it wants in any of the faculty lots, the copiers and copier services are open to everybody, the supply cabinets are open to everybody, and adjunct faculty are not required to jump through any other hoops than the full time faculty are.
At the end of last term, I felt burned out.
At the beginning of this term, I felt better–but I’ve been back fewer than two days, and I’m fed up.
You have to pay people with something. If you don’t pay them with money–and this place really doesn’t–then you pay them with respect.
And right now, I’m being treated like garbage.
I’ve been thinking about the statements made here that much financial crime is too complicated to make a good basis for a murder mystery, or that some of it isn’t even technically crime.
Before I get to what bothers me about that, let me say that when I said that the subprime mortgage meltdown mess would make a good basis for a murder mystery, I wasn’t talking about doing something esoteric about somebody who knew too much about the way the business was operating.
I was thinking of killing off–in a literary sense–one of these guys who scammed first time homeowners. And there were a lot of them, and what they were doing was definitely scamming. Some of these “loan officers” lied about the chances of an adjustable rate mortgage requiring rising payments rather than falling ones, and about how fast that could happen. One guy would turn couples down for loan A, then help them apply for and get approved for loan B, where loan B could be as much as twice as large as loan A. The trick, of course, is that the loan officer was paid a percentage of the total amount of the loans he approved–and he couldn’t get caught by his loans defaulting, because the loans would be sold to another company before that happened.
But it bothers me that so many people seem to think this is too complicated to understand. Of course, it’s what conmen do–make you think “it’s complicated” when what you should be thinking is “it’s crazy.”
So, if you can bear with me, let’s look at the mortgage markets.
In a sane and ordinary market, here’s what happens:
1) The homeowner applies to the bank for a loan.
2) The bank decided what the risk is that this homeower will default. If the risk is relativel small–if the homeowner looks solid–the bank approves the loan.
3) The homeowner makes mortgage payments. The bank collects these payments, and pays itself the interest.
4) If something untoward happens–a catastrophic illness, a job layoff, whatever–and the owner defaults, the bank works very hard to get that homeowner to the point where he does not go into foreclosure BECAUSE
5) The bank tends to lose money in foreclosures, and it looks bad in the community if the community is a regular small one, and it looks bad in the accounting, too.
The above system has, in the US, one exception, and that is in mortgages for people with very low incomes, which are guaranteed by the federal government through two quasi-governmental entities called Fannie Mae and Freddie Mac.
Guaranteed mortgages have a higher rater of default, because they have lower standards for granting loans, but they’re not bad for the banks because they’re guaranteed and the Federal government picks up the tab if there’s a problem.
So far, so good.
Note, however–the system depends for its stability on THE FACT THAT THE BANKS HAVE TO HOLD ONTO THE LOANS.
For the system to work as described above, the bank that grants your mortgage has to hold onto your mortgage and be responsible for it.
What happened starting in the early Eighties was something new, and it went like this:
1) The homeowner applied to the bank.
2) The bank granted the loan based on whatever criteria it had (see above).
3) The bank then SOLD the loan to another bank, or to an investment bank, or to a brokerage OR
4) The bank took a whole bunch of these loans, bundled them together, gave them a name (House Proud!), and sold STOCK in that bundle to investors, other banks, etc.
5) Whether the bank did 3 or 4, the result was the same, and that was:
6) The bank DID NOT make money because homeowners were paying their mortgages BECAUSE
7) The bank DID make money by selling those mortgages to somebody else.
So, if I’m Happy Local Bank, and I give an alcoholic kleptomaniac barber a $200,000 mortgage for a house in Happy Acres, I don’t have to worry if the barber can make the payments.
I take that $200,000 loan and sell it to Megacountry Investment bank for $300,000 (the amount of the loan plus the expected interest over the course of the loan).
I’m not free and clear–I’ve made $100,000 on that mortgage, and I don’t have to give a damn if it defaults or not. It’s none of my business.
In 1980, the average mortgage guy at the average bank was a bank officer hoping to move on up to the next level in the hierarchy.
By 2005, the average mortgage guy at the average bank was a salesman working on commission.
It made sense for the guy and his bank to make as many mortgage loans as possible, the bigger the better, no matter what the chances that they would ever be repaid.
They just took those loans, bundled them into packages, sold shares in the packages until they were completely covered–and went out and made more loans.
This is really not complicated.
It’s stupid, and it’s crazy, but it’s not complicated.
It could have been avoided in a number of ways, not the least of which would have been holding on to something called the Glass-Steaggall Act, but I do think it’s straightforward enough so that issues arising from it could become the basis of a murder mystery without too much time being spent explaining things.
Although, in writing such a book, I’d concentrate on the people–some of the biggest operators here, especially the ones working for the big non-bank mortgage companies, were extraordinarily vile in the way they treated people.
But mostly I think it bothers me that the con men have managed to get so many of us to throw up our hands and declare “it’s too complicated for ME to understand!”
It isn’t, really, once you accept the obvious–that what’s happening is a scam, and it only seems complicated because if you look at it as simple it’s obvious that it’s a scam.
Two to four days from finishing this book–the one I’m writing–and then I’m going to fall over like a tree.
So, I’m going to skip the global warming stuff and go straight to Bernie Madoff, which at least interests me.
And the answer, of course, is that a lot of the “money’ was not money at all, but fantasy. You’d give Bernie your cash, and you’d get statements from him saying that your portfolio had increased by so much this year, and so much next, and on and on.
In reality, of course, there were no increases because there were no portfolios. Bernie would take the cash, pay himself and his people, and pay those few people who decided they wanted to cash out.
But in spite of the fact that most people didn’t have the money they thought they had, they did, at one point, actually have money–a few hundred thousand here, a couple of a million there. The charities that got ripped off frequently had to shut down altogether. That was true of Wiesel’s foundation.
And people, often financially unsophissticated people who had worked very hard for a very long time, made plans and decisions about things like retirement on the basis of what they had good reason to think was accurate and honest information.
But it’s remarkable, to me, how much of the present financial mess is about money that was never there to begin with. It’s true in the subprime mortgage mess, too–the real problem (in terms of causing a systemwide failure) wasn’t the mortgages themselves, but the “financialization” of the mortgages, which meant that local banks did not have to worry about whether or not the loans they were making were viable–or they thought they didn’t.
Local Bank gives Deadbeat a mortgage, then bundles that mortgage into a package of them and sells that package as a “mortgage backed security,” like a stock. Local Bank has its money back already, and the risk belongs to your 401K, which bought the “derivative” as an investment.
There’s something that would work as a murder mystery.