When Good Men Do Nothing – How The U.S. Became a 2nd Class Country
“All that is necessary for evil to triumph is for good men to do nothing” is translated from Russian by Leo Tolstoy, “War and Peace”. Many attribute the original quote to Edmund Burke who said “The only thing necessary for the triumph [of evil] is for good men to do nothing.”
And nothing is what they did. The United States was a society governed by mediocrity. American financials crashed.
Consider, for a moment, that American Presidents are only passing though Washington. Here today, yet gone in four or eight years. While it may be easy to focus on eight years from 2000 through 2008, is unravelling of US finance correctly attributed to one man?
Errant executives blame those who bring misconduct to light rather than themselves for their own misdeeds and abhorrent dereliction of duty. Washington DC is no exception, nor is the Chief Executive.
Allow historians to remove the American President from the equasion. We shall again ask the question. What caused America’s economy to collapse, taking with it so many international allies? Why did many good men do nothing?
Look at this chart which depicts the US gross domestic product. The red indicates GDP without mortgage equity withdrawl:
United States gross domestic product would have been negative without home equity lending, also known as mortgage equity withdrawl.
One truth is known — Innovative and complex Wall Street financial schemes brought the nation and world’s banks to the verge of collapse and plunged the economy into the deepest recession since the Great Depression.
What transformed normal mortgage lending into greedy schemes? What follows is a short history lesson from 2002. (Download 20 year history here)
In October 2002 Household International was charged with predatory lending. The company paid $484 million to settle allegations. State Attorneys General filed predatory lending charges against Household International, not federal-level regulators.
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Imagine the horror in Washington. Having officially said the recession of 2000 was over, Washington planned to use home equity money to stimulate the economy. To do so predatory lending must be overlooked and allowed to become acceptable. Such lending would soon be known as ’subprime’.
The recession of 2000 never ended. Now experiencing the worst recession in 50 years, the current United States recession did not start in 2007.
Look at the stark contrast between reported GDP in 2002, and actual GDP without home equity lending. Household International was supposed to be an example for other lenders, not the target of state attorneys general. How dare they?
Americans said “We will use home equity to rebuild America, but you should be fair about it.” Washington was really saying “Predatory lending shall be mainstream, acceptable, and encouraged, otherwise GDP will look bad.”
Once the door was opened there was no turning back. When Washington told regulators of the master plan all state-level regulators were silenced.
Home equity money stimulated the economy through 2007, government stimulus checks stimulated 2008, and bailouts stimulated the economy in 2009. Now there is no money. What can possibly stimulate 2010 and 2011?
Imagine, if you will, a scenario where America orchestrates the rise and fall of currencies and the GDP of other nations. A dangerous and precarious idea at best, it does not seem to be the case. At least not directly.
Will historians make a case for other nations manipulating America from 2000 through 2008? Some analysts think that is the more likely scenario. Was the US financial crisis due to manipulation in Washington, outside influences such as terrorist attacks of 9/11, or simple Wall Street greed?
Americans do not grasp how deep anti-American sentiment goes. From the cold war era through today many people think they live under American economic occupation. ‘Globalization’ is another man’s ‘Americanization’. Global recession has had repercussions that are likely to be felt for a long time.
The once-dominant Group of 7 industrial countries, including the United States, Japan and European powers, has largely been eclipsed. Emerging economies are now poised to play leadership roles that were unthinkable just a few years ago.
In the United States, people are losing their homes, businesses and jobs. Billions upon billions of tax dollars have been spent to shore up banks that are “too big to fail.” The banks, however, are not lending. Credit card companies are retracting credit. When will it end?
As industry profits bounce back and banks repay Troubled Asset Relief Program funds while proposing to hand out billions of dollars in bonuses Americans are still struggling with a 10 percent unemployment rate and home foreclosures.
In the past year, federal stimulus funds have bolstered the housing market, postponed education layoffs, funded research and development projects and funded infrastructure developments. By 2011, many of those programs will expire, and economists warn that unless the private sector rebounds enough to take the lead, the economy could slip back into recession.
One must question which recession economists are referring to. Is it the recession of 2000 that never ended, or a shortsighted view claiming a ‘recession’ of 2007?
On a global scale “War And Peace” might take on a new meaning if greed overtakes the United States again. At the very least we enabled our adversaries. It is possible that financial leaders are terrorists in disguise. Remember, 9/11 struck the heart of New York’s financial sector.
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