I have four friends who lost their homes during the financial crisis, or who are in danger of losing them. In every case, they say, “We were naive. We shouldn’t have taken the mortgage (or the second mortgage). But it seemed like a good idea at the time. It was our fault, but it was also the banker’s fault. They misled us.”
Four families, losing their homes.
The banks took the money and ran. They repackaged the mortgages and resold them. They got richer, and the poor got poorer. I was reminded of that by the crisis in Greece, where the poor Greeks have a terrible choice: stay in the Euro zone with severe austerity measures more or less forever, or go their own way with a new, worthless drachma. How did they get in this situation?
Duh. The banks helped them do that. Here’s part of Wikipedia’s description:
“Greece has had particularly precarious debt dynamics and Greece is the only member state that cheated with its statistics for years and years. It was revealed that Goldman Sachs and other banks had helped the Greek government to hide its debts. Other sources said that similar agreements were concluded in “Greece, Italy, and possibly elsewhere”. The deal with Greece was “extremely profitable” for Goldman.”
Let’s see: Very clever people from big banks mislead people and help them make bad decisions. Bankers are so clever in fact that they are able to get rich out of tragedy. People suffer.
The poor suffer the most.
Does this sound familiar? Is there a pattern here?
Now, I don’t deny it is handy to have a bank account. I have a couple, in fact. But I consider them necessary evils, and if I could spend the rest of my life without ever seeing a bank, I would. Maybe progress means that everyone on the planet will be “financially included”, and their resources will be under a pyramid of financial institutions with Goldman Sachs at the apex.
What’s wrong with that picture? What could go wrong? How about, “everything”?
Maybe that’s inevitable, and if it is, I accept it. But I’m not happy about it, and I promise to keep looking for alternatives. I am saddened and amazed at the enthusiasm of many of my friends and colleagues, as they help herd poor people into formal financial institutions. Don’t you have any second thoughts about that?