CHASING DOWN THE MUSE: We are pawns in financial gamesmanship

Two hours before my scheduled departure from the tranquillity of the Sea of Cortez, a dark and ominous squall thundered up from the south. I’d been sitting in the sun, soaking up the meditative sound of small waves, and tossing column ideas around like beach stones in the tidal flow. The sky had been a brilliant blue when, suddenly, all went black.

Blasts of wind tossed the chaise cushions, and large drops of rain began to pelt the ground. I grabbed the cushions, towels, my books and water bottle and rushed toward the shelter of the palapa. Thunder bellowed across the bay between the islands, and small boats raced against the storm for the shelter of the marina.

I’d been contemplating politics and financial markets before the weather changed. I suppose it all fitting, since I’d just finished reading about the Feds’ rescue/takeover of A.I.G., which came close on the heals of the bailout of Fannie Mae and Freddie Mac. What happened to corporate responsibility?

I read over and over again about the housing meltdown, and blame has been laid on the homeowners who mortgaged themselves to the hilt. Some were merely grabbing the American dream. Others were pushing as hard as possible in the get-richer scheme. Others had turned home speculation into a profitable business.

We’ve been told that they/we were bad, bad, bad for not understanding the risks involved in the adjustable-rate mortgages, all the while ignoring the fact that most lending institutions/mortgage bankers were keen to intimate that increasing interest costs could be refinanced later. And wasn’t the model for obtaining wealth? Go with the escalating values, and trade up. How was this possible? Now mind you, I am not a financial genius and will admit my naiveté of the intricacies of the financial markets. But it is this very element — that I am not as versed in market wisdom as those self-proclaimed gurus of Wall Street — that sheds some light on my arguments. No one could have ever gotten what are now called “outrageous loans” if the banks and the backers and guarantors of banks had not been fat-happy to make them.

Risk vs. reward. If I go to Vegas and throw $100 down on the craps table, we all know what that is called: a crap shoot. If I buy a stock in any corporation, I should know the risks. If not, it means I didn’t do due diligence and read my thickly paginated brokers agreement. The risks include — going up — and going down.

Short sellers buy on the hopes of a going down trend.

Investing is a risky business. Why then, should the banks and the mortgage backers suddenly get a free get-out-of-jail card? Can I have one, too? Can I buy some questionable securities, max out my credit cards and pay myself an exorbitant salary? Then, when things don’t keep going my way, I can’t make the payments, and no one wants to buy the stuff I’ve collected in my rise to riches, can I simply say, “oops,” and have my neighbor bail me out?

Isn’t that exactly what is happening? We, the taxpayers, thanks to the federal government and its actions, are now bailing out the very institutions that fueled the housing up-tick. They didn’t do it alone. They had help by the very same Feds who, because the climate in Washington/Wall Street since the ’80s was to hold regulations of anything at a minimum, provide tools for escalating profits, and contributed to the monster that now threatens to swallow our national sense of financial well-being.

My mind is in a tangle of what this all means. I can’t help but think that as Wall Street became a glorified Las Vegas, and the players found themselves in bed with the administration, that all of the rest of us became merely pawns in the game.

CATHARINE COOPER loves wild places – and thinks right now she needs more of them! She can be reached at cooper@catharinecooper.com