(What’s that you say? You don’t read the papers? Your TV broken? You didn’t get that text? PAY ATTENTION! This affects YOU big time!)
What’s it to you, the Trinity student trying to master the arcane veribiage of FAFSA and LEAP and TAG and CAP and Pell and Stafford and unsubsidized loans while juggling studies and jobs and caring for your siblings, children, family members?
What’s it to you, the Trinity parent or spouse, perhaps trying to manage the expenses of several family members in college while wondering how long you can keep driving that old car, or whether driving makes any sense at all, what with gas prices being what they are, but you bought that house way out in the ‘burbs to save money, but you have to drive to get anywhere, and now look at those housing prices declining rapidly!…. ???
What’s it to you, the Trinity staff member whose idea of a “hedge fund” is saving up to buy a new clipper for the yard, who looks for a good “swap” in the Penny Saver paper — your gently used golf clubs for my like-new treadmill?
What’s it to you, the Trinity faculty member who would prefer to read Aristotle in the original Greek instead of one more article explaining why we all should care about auction rate securities and the heartbreak of derivatives?
What’s it to us, American taxpayers, already carrying the debt of a $600 Billion war, now taking on the sins of the financiers to the tune of, oh, $700 Billion-to-$1 Trillion, give or take?
If so many smart people didn’t see this coming, and aren’t sure the solution will work, far be it from me to explain it or analyze whether having Uncle Sam pay for all of that bad debt is a good idea. The whole thing reeks — of greed, of shameful mismanagement, of appalling breach of the trust of investors, homeowners and just plain citizens for whom a great deal of money might be $50,000 in savings for retirement. (See Bureau of Labor Statistics report on baby boomer retirement savings.)
So, what’s it to you? Why do you have to care about what happened to those companies with funny names like Fannie Mae, Freddie Mac, AIG, Bear Stearns, Lehman Brothers? You’ve never shopped there, have you? Will you miss them when they’re gone?
Yes. And, Yes.
Yes, know it or not, you have shopped there, one way or the other. And, yes, as these financial companies have failed, gone into bankruptcy, been taken over, merged, or otherwise changed radically from their once-robust profiles, you will miss them in ways you may not realize today.
For the average consumer — probably most of us here at Trinity, whether we be students, faculty or staff — this huge financial mess seems, at once, both hugely complicated and somewhat remote from our daily concerns. Trinity is sound; we are a deeply conservative institution financially, so we don’t take risks with money. The jobs of our employees are safe. We try to provide as much financial aid as we can to help students attend school.
But, in many ways that we may not even recognize today, we all will feel the consequences of the collapse of the financial industry and the decision of the federal government to buy billions of dollars in bad debt. The Fed’s decision is probably necessary; but even the wisest heads in this town can’t see the complete range of consequences.
Short term: the cost of borrowing money is going up, and the requirements for obtaining credit are getting more difficult. Trinity families may find it more difficult to borrow money to buy homes or cars; those with variable rate mortgages may be having difficulty meeting payments. Private student loans are at risk — few of our students have these kinds of loans, but for those who do, the stakes are changing (Congress took action last week to protect private student loans, but future risks remain.) Home equity loans are not so attractive any more. Some family members may be losing their jobs, particularly those in the companies affected. Retirement funds are shrinking, causing many people to delay retirement decisions.
Long term: how the federal government can absorb nearly $1 Trillion in new debt on top of the cost of the war that has already strained the government’s financial capacity is just not clear. At some point, in some future Administration, the president of the United States will have to tell the American people that the time has come to pay up for all of the mistakes and carelessness of this era. Just like you and me, this government cannot keep spending money it doesn’t have; the government’s money comes from us, the taxpayers. With a presidential election just weeks away, nobody wants to say that the taxpayers will have to pay up for these decisions on which we have not been consulted — but let’s not be naive.
And the executives of the companies who played fast and loose with other people’s money will be off on their islands enjoying another round of golf. And the public officials who let them get away with this terrible breach of trust will be busy building their presidential libraries or giving speeches about what it was like to be part of the worst cataclysm in American financial circles since the Great Depression.
And we, the people — we, the taxpayers — will keep on paying.
The central question in the presidential election: which candidate is best equipped to lead the nation out of this financial pit, to restore trust in our economy, to return the United States to a position of global respect?
What’s it to you? Please send your comments to me by clicking on the comments/questions link on the left side of this page, or send me an email at firstname.lastname@example.org Tell me your stories of how this economy is affecting you, and let me know if I may share your comments on this blog.