It's a Good Thing

The great national nightmare, to paraphrase the late Gerald Ford, isn't over, but I think we're past the really hard part.

You don't have to be a Harvard-educated economist (full disclosure: I went to Princeton) to figure out what is happening to our financial structure. It was all about lending money to those who couldn't pay it back, and then insuring the financial institutions against the consequences. And at least some of the poor unfortunate victims have to shoulder some of the blame: They lied on their loan applications. But no one bothered to try to catch them at it. They were just having too much fun.

So it's all collapsing in a heap, and everyone is feeling the pain. Good! That's what pyramids and bubbles are supposed to do -- collapse. This was like a giant Ponzi scheme. The only unanswered questions involve whether those in charge of it all should be in jail; but the jails have too many people in them now as it is.

We will likely enter into a period of regulation. It's necessary, because neither socialism nor the free market work in their purest forms. Socialism doesn't work because people don't want to give up what they feel they have earned -- that's human nature. And free markets don't work because people can't be trusted when the money is sitting right in front of them, waiting to be collected. Again, human nature.

What we will find to fix this is a mix of government regulation, and yes, self-regulation. The bankers probably won't put themselves into this situation again, at least for another 30 years or so.

The great thing about hitting bottom is that the only direction to go is up -- and you can bet that the rebuilding will be done on much more solid ground. There are some very spiritual lessons to be learned here. It gets you thinking about what really has value, and what doesn't.

When we're done with home loans, maybe the next collapse will come in the credit card industry -- and then maybe the HMO system, and who knows? Maybe even the tax code. It would involve learning the hard way -- but if we had to rebuild all of these things from scratch, maybe it wouldn't be so bad after all. We sure wouldn't be making the same mistakes anytime soon.

There, now I've said it.