Sunday, January 25, 2009

The tower of Babel

About the time I arrived here, all ready to do some monkey brain fiddling, fannie mae and freddie mac had just been bailed out. There were murmurs of recession, a crisis, worse than last time and the time before that, financial and economic jargon that I had never bothered to include as part of my vocabulary. I just knew that they were ominous terms. After all, I had a job, the university was paying me some money (not much but I was feeling glorious about being able to play around in snow when it eventually did come and I quickly realized that I wouldn't have to be on the streets if I had starbucks coffee.) When I first saw those two terms fannie mae and freddie mac I thought : oooh, like ben and jerry's and baskin robbins. Maybe the feds (oh ya, I was also saying government back then... I'm getting cooler now... I say feds) were bailing them out with tax payer's money because the cows had died ? That's what I thought at least. It turns out of course that fannie mae and freddie mac were selling lots of cows to lots of people in the flawed assumption that people are always going to want to eat more and more ice cream. The cows were very valuable you see, because the ice cream was getting sold a lot. So I was metaphorically right after all. But fannie mae and freddie mac were something to do with mortgages. Mortgage! - another word that I knew about simply because I happen to play a lot of monopoly (and lose a lot). I am sorry guys, but this really was how much I knew. At least I'm being honest about not understanding such stuff unlike some people ( ahem! ahem! ahem!). Tax payer's money ? Ha Ha Ha. I wasn't even gonna pay tax- I was going to get a rebate. So much for lots of starbucks caffeine and ridiculous excitement.

Then people asked me to get a credit card. "You need a credit card for everything. You need it if you want to buy a car, if you want a loan, if you want this, if you want that" and I ask "it isn't enough if I have the bank balance to buy these things ?" and they go "oh honey, if you have a good credit rating, you can pay all these loans little by little. If you show them you're responsible with your money by paying off your bills like a good girl, then they know you're going to be responsible with your money, and then they'll give you a loan, so you can buy things that you don't have money to buy right now but you know you're going to get later. Welcome to capitalism. There are always ways to make money". Oh nice. Nice. That sounds, fair and simple, say I, and off I went to get my credit card. Essentially I was going to try and get a good credit rating by buying lots of starbucks coffee. There wasn't much I wanted you see ? But as luck would have it, my credit card application co-incided with mr lehman falling down like a brick of blocks (oh not my term. Some paper said that. I figured out by this time that mr lehman kinda didn't wanna fall, but the higher ups decided not to help him. Sort it out yourselves you lil children, said they), and AIG (that name stuck because of those TATA AIG ads from back home) was getting bailed out (because the children were truly in a terrible mess) and merill lynch was getting taken over. Essentially, lots of stuff was falling apart. And the country was trying to elect its first black president, end a coupla wars, maybe start a few other wars, spread peace, stop lending money to bad bad people, and figure out a way to decide who good people were, who bad people were, try and reiterate that they really were the global leader ( we will be with you in sickness or in wealth)... and amidst all this my credit card application got rejected. So I call the credit card company to be politely informed that I have no credit card history. "Yes ma'am. That's exactly what I'm trying to do. Have a little faith in me. I am a good girl". But well, no one trusts anyone these days. So that's that.

By this time of course sub prime crisis was a very powerful world. On the way to dinner at udupi cafe, a friend's uncle explained how people got loans even when they didn't actually prove they could repay it, but of course things were going to get better and everyone believed it. All I could think was "and they let these people buy houses but they didn't give me my credit card ? C'mon brother".

What a weird weird world this was getting to be. People were living in gingerbread houses. When it rains, we'll stay inside the house and we'll keep ourselves dry. In the summer, we shall eat our gingerbread. By next monsoon, gingerbread is going to get cheaper and we'll repair the house with this cheaper gingerbread. And when it rains we'll go back into this house and keep dry. We're eating and living at no cost. Wow. What cunning ways to do stuff. What, ultimate belief in the happenings of gingerbread. Did we learn nothing from hansel and gretel ? Nothing at all ?

How people make money out of lending circularly is something I will never understand. I know it falls from interesting math equations. That's very nice. Please feel free to bandy unintelligible equations at me. But I think using common sense is more appealing. Especially if you want me to start being responsible for my actions, then I need to make sense of my actions. If I lend you a banana, and you lend the next person a banana and that person lends me a banana, we still have only one banana. How silly is it to think we have three bananas. Ask my monkeys ( those organisms that are way below the evolutionary ladder, with a less developed brain). They know it. That's why they never share their bananas. They chatter away and do silly things and do not engage in speculation and would rather eat one banana today instead of waiting on the three quarter chance that they'll get three bananas tomorrow. And we say that it is because monkeys have limited ability to be able to factor time into their decisions- well thank god for that. Because we humans do such a neat job of it don't we ? I may not know a lot of economics ( oh heck. I know none), but I could've toldja that its a waste building a lot of houses, that people who spend more than they have are always gonna spend more than they have, but honey, there's got to be money somewhere, and you cant keep circulating it, because well... you're all going have to pay up someday.

A so called investment advisor advised my friend "don't pay off your balance every month. Keep some of it and pay it off next month. Pay the interest and your credit rating will improve because it shows you can carry credit wisely" Of course you're going to improve my credit rating. You're interested in the interest aren't you ? But watch out. You're tempting me to never pay back. That's what the sub-primes did didn't they ? The joke's on you bozo. No wait, the joke's on them. No wait... umm... oh shit... its not a joke anymore is it ?

And then today, I try finally to apply for a credit card again. And I get a huge spiel about my interest, how it was between 3 and 9 percent plus prime rate as defined as the highest number in the wall st journal in the last 90 days and that right now it was at 4.5 % bringing the apr to between 8 and 13 %. And I wondered... who really understood all this ? Everyone just saw that as a rule interests were getting lower, and it happened like that for a while now, and maybe the engine's stopped whirring crankily and was finally coming to a standstill. Oh ... the engine was just about gathering steam.

The story goes....

"The people decided their city should have a tower so immense that it would have "its top in the heavens."(וְרֹאשׁוֹ בַשָּׁמַיִם) However, the Tower of Babel was not built for the worship and praise of God, but was dedicated to the glory of man, with a motive of making a 'name' for the builders: "Then they said, 'Come, let us build ourselves a city, and a tower with its top in the heavens, and let us make a name for ourselves; otherwise we shall be scattered abroad upon the face of the whole earth.'" (Genesis 11:4). God, seeing what the people were doing, confounded their languages and scattered the people throughout the earth."

(Source :

Did we want to reach for the heavens ?
Guilty as charged.
Did we want a glorious name.
Guilty as charged.
Were we greedy ?
Guilty as charged.
Were we disrespectful to the age old supply-demand spiel ?
*ahem.... there's always going to be supply, we're always going to demand no *
oh... we dont understand, is it ok? will you let me off the hook ?
Umm... no.
Ignorantia juris non excusat. You aren't excused from not knowing the law.
But no one explained to us.
And that's our collective problem innit.
As the story of Babel goes... we now have our languages and our equations and our crazy models reduced to a bunch of terminologies that no one understands.
We believed that someone understood. That if it should all collapse, that someone would have the key to putting it all together. And in all possibility it would never collapse, so really we were only just panicking. And so we decided to go high up into the heavens, when we really ought to have simply sat around and built houses with roofs just high enough to keep us warm and dry for a reasonable period of time... until we find ourselves in a better position to live in a slightly better house. There's that age old story about the hare and the fox. There are lessons to be learnt in such stories. It never does anyone any good to try act too smart for one's own ignorance.
Now, the tower stands unbuilt.
And we dont understand.
No one speaks the same language anymore.
No one understands anything anymore.
And while we can blame those silly tower builders forever, we encouraged them too.
And now we don't know how to fix it.

And that's the story of the housing babel.

- In idiotically simple terms

No comments: