Sunday, March 1, 2009

The cure for panic is action

Great Bruce Sterling speech/rant at It's his speech from Webstock, and it puts a lot of grumpy, gnarly, interesting, scratchy, vaguely troubling ideas into a human zone. I do love me some Bruce. Go read the whole thing, but this part, from near the end, is just great:

I've never seen so much panic around me, but panic is the last thing on my mind. My mood is eager impatience. I want to see our best, most creative, best-intentioned people in world society directly attacking our worst problems. I'm bored with the deceit. I'm tired of obscurantism and cover-ups. I'm disgusted with cynical spin and the culture war for profit. I'm up to here with phony baloney market fundamentalism. I despise a prostituted society where we put a dollar sign in front of our eyes so we could run straight into the ditch.

The cure for panic is action. Coherent action is great; for a scatterbrained web society, that may be a bit much to ask. Well, any action is better than whining. We can do better.

I, too, am bored with the deceit and pissed at phony market fundamentalism.

One of the things I teach the kids in my History of Advertising class is that credit is a bet on the future. You pay x% more for a car than the sticker price because you bet that your ability to pay will improve more quickly than the debt accrues. You may even hope that the car will help you do that.

Same with a house. You get a mortgage and end up paying 3X the cost of the house over the life of the debt because you believe that; a) the house will appreciate in value of 15-30 years to the point where it catches up to the vig, b) you're investing in something you can own rather than rent, and, c) you gotta live somewhere, so having your own place simply feels good.

Credit is OK. Betting on the future is good. The problems come when we define "future" in very different, and conflicting, quantities.

What totally rips my salami about the economic crisis is that a lot of it had to do with finance people, who clearly didn't understand what they were doing, taking my bet on "the future" -- my mortgage, wherein I have defined "the future" as 20 or so years from now -- and leveraging it for much more short-term gains. In effect, they combined all "the future" bets that millions of us defined in terms of decades and tried to squeeze value from it by the year, quarter, month and even day-part.

Would you ever bet all the equity you have in your house that the real estate market would do X or Y in the next day or so? Of course not. Your bet is that the value will go up in 15-30 years.

By taking the values and definitions all us homeowners bought into and flipping them around into the equivalent of junk bonds, these finance freaks have ruined the entire world's economy.

That's what happens when you don't count ALL the costs. As a friend on mine once said, "Your one night, drunken fling is the end of another man's 20 year marriage."

I was willing to invest a good chunk of my lifetime in my home. The banking system decided to get licker'd up and have a quickie with it. Thanks, Wall Street.*

We can do better. Thanks for reminding us, Bruce.

* Note: I'm aware that this is a gross oversimplification. If you've got a better, less gross, less simplified way of describing what's going on... knock yourself out.

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