While searching for a new topic for my blog, one thought that struck me over the Independence Day weekend is that this historic event that we celebrate each year is all about Choices. The founding fathers of this great nation chose to be free from the oppression of the colonial masters and to be able to set off on the pursuit of equality, life, liberty and happiness. Generations later, those pursuits continue and the ideals have not faded.
As we try to find our way through the present period of economic uncertainty, high unemployment, soaring budget deficits, two drawn out wars, and a whole financial mess brought about by the housing bubble and unbridled greed, we are faced with choices that we must make. Some of the choices will be hotly debated by people on both sides of the political and economic spectrum. A healthy debate is always good but we must not let it turn into a mud-slinging match or allow ugly words and unfounded accusations tear us apart. None of the choices will be easy and some will, with certainty, be painful but inevitable. What is key to the success in our march forward is for everyone to grasp that we’re all in it together – we can either sink or swim. As in generations past, we will need calm hearts and cool minds to make the balanced set of choices that will bring us safely back into harbor.
To understand the dilemma we’re in, we need only to imagine that all of us are passengers aboard an ocean liner, the "S.S. USA". There is a big gash on the side of the ocean liner and the ship's crew is fighting to keep the ship afloat. We can opt to vent and scream at what the crew members are doing about the situation but that would clearly be not helpful. Neither would throwing all of them overboard. Running a ship, let alone saving one, is not a simple task. Blocking others from acting or doing nothing or simply hoping for a passing ship to come to the rescue are not the smartest moves either. What we need are calm heads, constructive ideas (not rhetoric), and healthy debates that lead to smart choices.
Justifiable anger has been and continues to be vented against those who had helped create the financial mess and at the corporate executives at those ‘too-big-to-fail’ entities that had to be bailed out with taxpayers’ money. To be clear, I don’t like government bailouts of private enterprises any more than the person next to me and I can’t agree more that none of the bail out moneys should have been used to pay bonuses to the same people whose callous actions helped bring about the crash. That being said, the financial crisis called for quick thinking and difficult ‘on-the-spot’ choices had to be made. Failure to act fast as the events were unfolding would have resulted in dire consequences and collateral damages too frightful to even ponder. Imperfect as they were, TARP and the bailouts helped steady the S.S. USA so that it can be navigated back to shore.
I recently finished reading the book “Too Big To Fail” and it was an eye-opener on the behind the scenes dealings and decisions once the sequence of events that led to the collapse of Bear Stearns and subsequently Lehman Brothers started. The heavy and momentous choices that the (then as well as the present) Treasury Secretary, the Chairman of the Federal Reserve, Congress, and the CEOs of the many financial institutions had to make at short notice, were mind numbing. With hindsight, some might criticize those decisions but the reality was that time was a luxury they did not have. Events with potentially disastrous outcomes were happening at a rapid clip on a twenty-four hour clock cycle. If nothing was done immediately, the destructive forces could have accelerated and spread across the globe in a more catastrophic manner.
What brought about the near financial crisis was a series of poor choices. Homebuyers chose to borrow more than what they could reasonably repay even when they had jobs. Mortgage brokers chose to falsify records or ignore sound financial requirements in order to close the deal and get their commission. Investment banks chose to buy up those mortgages, repackage them as mortgage based securities - masking the high risk of default behind those mortgages - and sold them off to investors, earning a hefty fee in the process. We could go on but I think the point has been made – poor choices can only lead to ruinous ends.
The frightening thing is that most of us will continue to make poor choices for selfish reasons and short term rewards. Recent examples: We chose to punish those who are unemployed in this current economic downturn by cutting off their unemployment benefits. We chose to rail against regulations and controls that are meant to better ensure we won’t have a repeat performance of the recent financial meltdown. We chose to demonize healthcare realities and the inevitable end-of-life decisions we must all make. We continue to choose to close a blind eye to the cost of unfunded programs and wars.
We can change the direction of the ship and steer it into a safe harbor by making choices that will shift the balance back towards a greater focus on the American people. Our elected officials must make choices that will ensure that small and medium sized enterprises that form the backbone of the US economy have every incentive necessary to hire, train and retain staff. Our appointed official must negotiate more balance trade agreements with other nations and ensure adherence. As consumers, we must leverage our consumption power and choices to help keep good paying jobs in the US.
Choice, after all, is what “Government BY the people and FOR the people” is all about.
Remember, we are all aboard the S.S. USA.
