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Morning Reading
Good morning. Hope you had a good weekend. To start the week, voters in Iceland say with an almost unanimous voice, "we're not bailing out anyone else!" Plus, is the FDIC a moral hazard? And is the Millennial generation headed for "chump" status?
You go Iceland! (Wall Street Journal)
In the national referendum Saturday, Icelanders sent a resounding message to the rest of the world: We are not paying the debts of reckless financiers. While we are few and powerless, we refuse to be bullied by our European neighbors. Some 98% said "No" to a recent deal negotiated by their government with its British and Dutch counterparts; only 2% voted for it.
What's so sacred about bank saving accounts anyway? (Forbes)
Looked at in this light, when we consider "moral hazard" as it applies to banks, at some point we the savers must acknowledge that the moral hazard is us. Because our savings are over-insured, we don't stop to consider the activities or the health of the institutions we bank with.
The next generation gap (Washington Post)
Millennials could become the chump generation. They could suffer for their elders' economic sins, particularly the failure to confront the predictable costs of baby boomers' retirement. This poses a question. In 2008, Millennials voted 2 to 1 for Barack Obama; in surveys, they say they're more disposed than older Americans to big and activist government. Their ardor for Obama is already cooling. Will higher taxes dim their enthusiasm for government?
Walking one block damaged by the housing crisis (NPR)
The house across the street just went for $75,000 in a foreclosure sale.
"And I bought mine for $260,000, and it's the exact same home," Sandoval says. "I've been in the house. It's the exact same home."
But that's not why Sandoval stopped making her mortgage payments. Her savings ran out, and she was finally hit with the painful reality that she and her husband really couldn't afford this house. They never could.
Video game technology shifts to rewarding play (NPR)
Xbox has plans to release a camera that sits on top of a TV that allows a person to control games by moving his body -- without any controller whatsoever, he says.
The fact that technologies also are getting cheaper and cheaper also means we'll see more "disposable technologies," Schell says, noting how people may be rewarded for mundane activities.
"Your toothbrush will give you points if you brush your teeth everyday," Schell says. "I think we're going to see more and more of that because technology is just creeping into these places we don't expect."
Scott,
The John Tammy article on Forbes is interesting. It seems from the beginning of the financial crisis, there has been an effort by Wall Street and conservative commentators to pin the financial woes of the country on the average American. Through a neat maze of syllogism, logical fallacies, and convenient ignorance of history, Tammy advocates the dismantling of the FDIC. While he trumpets the virtue of the marketplace to control the health of financial institutions, he ignores the very events that led to the creation of the FDIC, namely a run on the banks during the Depression I. And, lo and behold, he's a contributor to Real Clear Markets.
It amazes me that there are people still advocating the "virtue" of the market when the market clearly failed. Further, it is galling that "we the American Consumers" are to blame for all of this; the shenanigans and outright fraud of Wall Street somehow does not compute in any of this. In the end, they all seem to sing the same refrain: "well, if you didn't ask for it, we wouldn't have given it to you, so it's your fault." Sorry for the tirade, and thanks for finding these gems that show us what nonsense is still going on.
<i>"It seems from the beginning of the financial crisis, there has been an effort by Wall Street and conservative commentators to pin the financial woes of the country on the average American."</i>
Listing the average American as at least partly to blame is hardly pinning all the woes on them.
Well, with comments like "it is consumer debt that fueled the crisis" and, as in Tammy's article "the moral hazard is us" it seems like the blame is being squarely placed on the average American. While I also agree that the blanket bank bailout was a bad idea, I find it laughable that average consumers are somehow to blame. The crux of the argument is that consumer demand fueled the practices (credit cards and mortgages) that led to this crisis. But, is it consumers' fault for using these products, or Wall Street's fault for irresponsibly facilitating them for people that shouldn't have them? Who's responsibility is it for assessing risk? I don't think Joe Average is in any position to assess sophisticated risks like a bank with 400 lawyers and 800 MBAs on staff, do you?
