The Wisdom of Gordon Gecko

We didn't put out a garden this year, because we knew we had to figure out something different. Our garden's location is at the edge of where our yard becomes wetlands, so all that marsh grass encroaches upon it...not to mention the weeds. And no, there's no moving it, because Ken put up an 8-foot tall fence (with an additional 2 feet underground) to keep out the deer and other critters. It's not going anywhere. Even when I weeded frequently, I just couldn't get a handle on all the weeds. So for next year, based on a garden that Ken sees when he drives to work, we're going to enclose the raised beds with boards (right now, there is no barrier between the beds and the walkways), then cover them with black plastic sheeting. That will help warm the soil in the spring, then when I plant, I'll cut holes in the plastic, and that should control many of the weeds.

 

This weekend, Ken went out and got out all the tallest weeds. Thank you, Honey, because I might very well have gotten lost in there...we had a weed maze instead of a corn maze! Today I got out and started working on getting out the ground weeds, and Lordy, the wild strawberry vines were out of control, at least in the bed I was working on. I got most of that one finished, but I started working up a sweat, and that caused the mosquitoes to start swarming around my head (even though I had on plenty of bug spray). That makes me crazy, so I stopped before I finished the first bed...only five more to go! :( Well, tomorrow is supposed to be a little cooler (I hope it doesn't rain, though), and I should be able to get more done. Being out there again did make me excited for next year! I hope we have a really nice crop next year. Cousin Doug was telling me that the best garden--and best tomatoes--he ever grew was when he mixed cow manure in the soil. I'm thinking that's the way to go...but I'd better make sure I have some gloves I can just throw away!

 

Now, on to Gordon Gecko. That was the character played by Michael Douglas in the movie "Wall Street," and the villainous Gordon is best known for saying, "Greed is, for lack of a better word, good."

 

And for many years it was very good for certain investors, bankers, and financial moguls, as well as our economy. The other day, Ken wrote a very good synopsis of a Time article about the financial crisis, and it helped me understand things a little better. This past weekend, I read the full article, and while much of it is still beyond me, I'm beginning to grasp it all. I want to understand it better, because it's such a convoluted MESS and the most important issue that we're facing right now, that I feel like I need to try to really "get it."

 

The concept of a laissez faire approach--also called a "let it be economy"--to the market became popularized back in the Reagan era. Reagan and his fellow Republicans believed in a "hands off" attitude towards the market, and this worked well for many years, including through the Clinton years. The prevailing feeling was to leave the market alone, let it drive the economy, including job creation, and everything would be fine and dandy. The housing market soared, credit was distributed like candy at a parade, construction boomed, the economy was strong...but the concept of deregulation of the market didn't take into account one of mankind's greatest flaws: greed.

 

As investors (both domestic and foreign) demanded higher yields, financial firms took greater and greater risks, taking a gamble on borrowing many times their capital in order to reap greater returns. Wonderful when it worked, but as the housing market began to crumble as supply overwhelmed demand, defaulted mortgages meant that the value of their actual capital plummeted, resulting in a precipitous drop in their returns and putting their companies in danger of catastrophic failure--not to mention the funds that millions of Americans entrusted to these firms.

 

So here we are today. Some firms are going under, but others need government intervention. Our good friend Mark wondered why we don't just let these firms fail, and let them learn a hard lesson. I understand where he's coming from, and normally that's my attitude as well, but this is much bigger than many of us can comprehend. If many of these institutions fail, it will make it increasingly difficult, if not impossible, to obtain credit. And we're not talking about just getting a loan to buy a house, although that will get very tough, too. We're talking about corporate loans, loans that companies use to build new facilities (or like Ken's company, to build new power plants), which create thousands of jobs and opportunities, and which drives the economy. To not provide government assistance now would essentially mean a collapse of our economy, and as I've been preaching saying for a while now, we can no longer afford to believe that we are alone in this. Our economy here in America is one of the driving forces of the global economy--we have plenty of foreign investors, remember--and if we go down, everyone goes down.

 

Apparently a compromise on a "bailout bill" has been reached, although plenty are still not happy with it. Should be an interesting vote.

 

From an AP story on MSNBC.com:

Sen. John McCain defended deregulation on Wall Street even as he endorsed a $700 billion bailout of financial firms in an interview broadcast Sunday.

McCain was asked if he regretted supporting a 1999 law that removed barriers between investment banks and commercial banks that were erected in 1933, in response to the 1929 stock market crash. "No," McCain said. "I think the deregulation was probably helpful to the growth of our economy."

[Sen. Barack] Obama pointed out former Sen. Phil Gramm, one of McCain's economic advisers, was a chief sponsor of the 1999 bill that removed restrictions on investment and commercial banks.

I think Sen. McCain was probably right in that deregulation was helpful to the growth of our economy. It was quite a monster for a while. However, from what I've read--and this is merely my opinion--deregulation is the overriding problem here. "Let the market be" is great in concept, but it forgets one very important thing . You can't change human nature, and uncontrolled greed results in uncontrolled growth, which results in eventual collapse, so much so that this is probably the worst financial crisis since the Depression. The fundamentals of our economy are NOT strong right now, and I don't care what kind of spin you want to put on it. This is big, and government intervention is a necessity. Which, of course, means that we'll all pay in the short term. In the long term, things will recover, and the American taxpayer will probably benefit. For those of us who have a while yet before we reach actual retirement age, we can ride it out. For those who are already retired, or approaching retirement, their investments and funds MUST be protected. Perhaps we can eventually get back to a more laissez faire approach, but I maintain that we can never again deregulate to the point that we have, otherwise our country will be facing a similar crisis a few decades down the road.

The Time article Ken and I read about this concluded:

Coping in this new world will require adjustments by millions of Americans. We all will have to start living within our means--or preferably below them. If you don't overborrow or overspend, you're far less vulnerable to whatever problems the financial system may have. And remember one other thing: the four most dangerous words in the world for your financial health are "This time, it's different." It's never different. It's always the same, but with bigger numbers.

 

Ken commented here the other day that I seem to have a multi-tiered soapbox. I can't argue with the truth, so....

 

[climbing down one level on my soapbox]

Tags: Wall Street, Gordon Gecko, greed, financial crisis, bailout, laissez faire, deregulation, John McCain, Barack Obama