After the Crash... Blame the Poor

Weblog 11 October 2008
The week the world crashed
Jozi.
Blame the Poor

Some centuries ago an economist named Bernard Mandeville wrote an entertaining piece called the Fable of the Bees in which he illustrated the reality that our glorious market based, individualist driven, self interest motivated, slaughterhouse of an economy has given us prosperity, comfort and joy: such that a 21st century citizen of modest class lives better today, than his wealthiest ancestors of only a few centuries back.

The moralising class has never been fond of this truth, and has persisted with the kollektivist ideal of subjugating the common citizenry into a hive, in which incentives were modest and the work dull and tedious, repetitive, and without seeming purpose. Thus it is in this most Klensed of weeks; as the global, illusory financial edifice, crashes down around our ears, that the moralising class will come into its own and they will rant and rage; and take over all our former activities and drive us through the Depression that must certainly follow the folly, of adhering to a moralist precept and lending money to the poor.

For ironically it is ultimately the Poor who have brought this apocalyptic catastrophe down upon our heads.

Under pressure from the leftish side of the American political spectrum, the idea, that lending money to poor people, who had no real means of long term support, was counter to historical banking policy, was somehow “spun” to equate with being a “bad” person. So a new industry came into existence inspired by a new generation of MBA driven, substance enthusiast sustained financial manipulators. And did they have a party: and did the poor get their houses.

The inspired market was driven to heights never before experienced until ultimately the market snapped back. Reality check deluxe.

Those moralists who believed that all economics is inspired by relativity have just discovered that it isn’t. As long as resources are finite so too are the iron laws of economics immutable.

What comfort now then for the moralists?

Somewhere in America will be some citizens who benefited from the plan to flood the market with the so-called Ninja loans [Ninja: no income no jobs atall].
Some will have survived to lift themselves above the poverty datum line through religiously inspired thriftiness, and others through a more secularly inspired gift for self-advancement. Some may well have have sold out at the hight of the property boom and taken the great gift of money back to a reconstituted trailer park and enjoyed a cosy retirement. Whatever; there will be those whose lives are immeasurably better off today, notwithstanding that the whole idea, that underpinned the massive boom of the past half decade, was floored as well as flawed.

If the idea of lending money to people who can’t afford to pay it back was a flawed one then the idea itself was ultimately floored by something we so completely took for granted that its very speed has shattered our illusion.

In the same way that that 1987 caught the world by surprise so has the crash of 2008 been accelerated by information processors that now move millions of times faster than human beings can think or even respond… let alone agree on strategies that, until they occurred, were treated with denialist disdain.

Happy blogging