Personal Credit Crisis: Our inner Gordon Gekkos

A few months ago, I authored an op-ed in Planetizen, titled The United States of Gordon Gekkos. I wrote there:

While banks and real estate agents are being accused (correctly, of course) of being the proverbial greedy and conniving foxes, consumers are being portrayed as innocent lambs. It is, after all, the role of business to tempt us with products that might not always be healthy. This is why a fundamental theme in our economic system is caveat emptor—let the buyer beware. I cannot help wonder why consumers became so greedy to increase their real estate consumption—the greed that led to the traps in the form of teaser mortgage rates without any money down.

It is not at all the case that I am finding the consumer alone to be at fault. Nope. But, we, too are to be blamed.

Edmund Andrews, an economics reporter, writes about his own personal credit crisis in the NY Times magazine, and in it he describes how, despite years of covering all kinds of economic crises, he too joined the insanity that home-buying/borrowing was. It is a depressing tale. It could have happened to any one of us. I don't know which part of his narrative to excerpt, because I think his story can easily become distorted with an excerpt out of the context. So, here is the link; read it.

"Greed is good"

In "The United States of Gordon Gekkos" I wrote about greed--not just on Wall Street, but on the metaphorical Main Street too. Without greed, for all purposes, we can't have the economic system we have. Can't live with it, and can't live without it!
Warren Buffett says that now is the right time to be greedy again:

Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.

Bakersfield, too, contributed to Lehman Bros' demise

In light of Lehman Brothers' bankruptcy, am reposting an earlier one:
We lived in Bakersfield, CA, before moving to Oregon. We sold our home just before the real estate mania set in. Bigger and bigger homes were being built, and speculators (flippers) were buying from all over. McAlister Ranch was one such mega project, which is one of the reasons that Lehman Brothers is now in a mess (watch the following YouTube clip)



I tell you, we are the United States of Gordon Gekkos :-(
Update: the Bakersfield Californian lists the investments in Bakersfield and Kern County with the Lehman connection.